17:9A-59.35. Credit on precomputed interest charges; prepayment or acceleration; formula; prepayment on non-precomputed small business loan without penalty

(a) When the unpaid balance owing on a precomputed small business loan is repaid in full, or when the maturity of the unpaid balance of such loan is accelerated before the date scheduled for the payment of the final installment, the bank shall allow a credit on account of the precomputed interest charge made on such loan, the amount of which shall not be less than the amount determined by the application of the formula C = AN / D ( "the rule of 78's" ) in which "C" represents the amount of the credit to be given; "A" represents the amount of the precomputed interest charge; and "D" is determined by ascribing to each month included in the period for which the precomputed interest charge was computed, reckoning from the day upon which the loan was made, the cardinal number descriptive of the number of months scheduled, by the terms of the loan, to elapse from the beginning of each such month, to the date to which the precomputed interest charge was computed, and the total of all the cardinal numbers so ascribed constitutes the quantity "D" ; and "N" represents the difference between the quantity "D" and the total of all the cardinal numbers ascribed to the months which have elapsed, in whole or in part, from the making of the loan, to the day upon which such repayment is made, or to the day upon which the maturity of the unpaid balance of such loan is accelerated, as the case may be.

(b) The Commissioner of Banking may prepare and distribute to such banks as shall make a request therefor, a schedule or schedules based upon the formula stated in subsection (a) of this section, and credits allowed as provided in such schedule shall constitute a complete compliance with such subsection. A copy of such schedule, duly certified by the commissioner, shall be evidence in all courts and places.

(c) This section shall not apply where the amount of the credit to be allowed is less than $5.00.

(d) The unpaid balance owing on a nonprecomputed small business loan may be repaid in full at any time without penalty.

L.1964, c. 162, s. 11. Amended by L.1979, c. 319, s. 6, eff. Jan. 18, 1980.