17:9A-53. Scope of article; definitions; interest

A. In addition to such other loans which banks are authorized to make, a bank may make secured and unsecured installment loans upon the terms and conditions prescribed by this article, but this article shall not be construed as prescribing an exclusive method for the making of loans which are payable in installments.

B. As used in this article:

(1) "Bank" means a banking institution as defined in section 1 (C. 17:9A-1) of this act;

(2) "Installment loan" means a loan (1) which is required by its terms to be repaid in two or more installments; (2) upon which interest is contracted for at a rate in excess of that authorized pursuant to R.S. 31:1-1; (3) the amount of which does not exceed the amounts authorized by subsection D. of section 54 of this act (C. 17:9A-54D); and (4) the final installment of which is payable not more than 12 years and 3 months subsequent to the date upon which such loan is made. The terms "installment loan" and "installment loans" as used in this article include both precomputed and nonprecomputed installment loans unless otherwise expressly stated;

(3) (Deleted by amendment.)

(4) (Deleted by amendment.)

(5) "Person" means an individual, a partnership and an association;

(6) (Deleted by amendment.)

(7) (Deleted by amendment.)

(8) (Deleted by amendment.)

(9) "Actuarial method" means the method of applying payments made on a loan between principal and interest pursuant to which a payment is applied first to accumulated interest on the principal amount of the loan and the remainder is applied to the unpaid principal balance of the loan in reduction thereof;

(10) "Precomputed interest" means an amount equal to the whole amount of interest payable on an installment loan for the period from the making of the loan to the date scheduled by the terms of the loan for the payment of the final installment;

(11) "Precomputed loan" means an installment loan which is evidenced by a note the face amount of which consists of the aggregate of the principal amount of the loan so evidenced, and the precomputed interest thereon;

(12) "Nonprecomputed loan" means an installment loan which is evidenced by a note the face amount of which consists solely of the principal amount of the loan so evidenced;

(13) "Unpaid balance" of an installment loan means the aggregate of the following:

(i) The face amount of the note evidencing such loan;

(ii) All amounts paid by the bank and added to such loan as provided in paragraph (2) of subsection A of section 55;

(iii) All interest accrued and unpaid;

(iv) Such further charges as the bank may make pursuant to law in protecting or enforcing a security interest in any property securing the payment of such loan or otherwise;

(v) In the case of precomputed loans, the amount of all late charges imposed pursuant to section 55;

less the aggregate of the following:

(vi) All installment payments made in the case of a precomputed loan, or all payments made in reduction of principal in the case of a nonprecomputed loan;

(vii) All payments made on account of or in payment in full of any charges or amounts referred to in subparagraphs (ii), (iii), (iv) and (v) of this paragraph (13); and

(viii) In the case of a precomputed loan, the amount of the credit to which the borrower is entitled pursuant to section 56;

(14) "Class I installment loan" means an installment loan which is unsecured, and also means an installment loan which is secured by an interest in tangible or intangible personal property;

(15) "Class II installment loan" means an installment loan which is secured by an interest in real property.

C. Notwithstanding the provisions of R.S. 31:1-1 or any other law to the contrary, a bank may contract for and receive interest on installment loans calculated according to the actuarial method, at a rate or rates agreed to by the bank and the borrower. This subsection shall not limit or restrict the manner of contracting for the interest charge, whether by way of add-on, discount or otherwise, so long as the interest rate does not exceed that permitted by this subsection. In the case of a precomputed loan, the interest may be computed on the assumption that all scheduled payments will be made when due, and all scheduled installment payments made on a precomputed loan may be applied as if they were received on their scheduled due dates. In the case of nonprecomputed loans, all installment payments shall be applied no later than the next day, other than a public holiday, after the date of receipt, and a day shall be counted as one three-hundred-sixty-fifth of a year.

D. (Deleted by amendment.)

E. (Deleted by amendment.)

F. (Deleted by amendment.)

G. The commissioner may prepare and distribute to such banks as shall make a request therefor, a schedule or schedules to be used in ascertaining precomputed interest, or he may approve a subsisting schedule or schedules, and interest taken pursuant to such schedule or schedules shall constitute a complete compliance with this section. A copy of such schedule or schedules, certified by the commissioner, shall be evidence in all courts and places.

L.1948, c. 67, p. 235, s. 53. Amended by L.1950, c. 311, p. 1051, s. 1; L.1959, c. 180, p. 726, s. 1; L.1965, c. 171, s. 7; L.1968, c. 436, s. 1, eff. Feb. 19, 1969; L.1973, c. 228, s. 1, eff. Oct. 16, 1973; L.1976, c. 128, s. 1, eff. Dec. 21, 1976; L.1981, c. 103, s. 1, eff. March 31, 1981.