§ 537.2510 — Rebate or refund upon prepayment

Iowa § 537.2510

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 537: CONSUMER CREDIT CODE

Text

1. Except as provided in this section, upon prepayment in full of a precomputed consumer
credit transaction, the creditor shall rebate to the consumer an amount not less than the
amount of rebate provided in subsection 2, paragraph “a”, or redetermine the earned finance
charge as provided in subsection 2, paragraph “b”, and rebate any other unearned charges
including charges for insurance. If the rebate otherwise required is less than one dollar, no
rebate need be made.
2. The amount of rebate and the redetermined earned finance charge shall be as follows:
a. (1) The amount of rebate shall be determined by applying the rate of finance charge
whichwasrequiredtobedisclosedinthetransactionpursuanttosection537.3201, according
to the actuarial method:
(a) If no deferral charges have been made in a transaction, to the unpaid balances and
time remaining as originally scheduled for the period following prepayment.
(b) If a deferral charge has been made, to the unpaid balances and time remaining as
deferred for the period following prepayment.
(2) The time remaining for the period following prepayment shall be either the full days
followingtheprepayment; orboththefulldays,countingthedateofprepayment,betweenthe

prepayment date and the end of the computational period in which the prepayment occurs,
and the full computational periods following the date of prepayment to the scheduled due
date of the final installment of the transaction.
b. The redetermined earned finance charge shall be determined by applying, according
to the actuarial method, the rate of finance charge which was required to be disclosed in the
transactionpursuanttosection537.3201totheactualunpaidbalancesoftheamountfinanced
for the actual time the unpaid balances were outstanding as of the date of prepayment. Any
delinquency or deferral charges collected before the date of prepayment shall be applied to
reduce the amount financed as of the date collected.
3. Upon prepayment, but not otherwise, of a consumer credit transaction whether or not
precomputed, other than a consumer lease, a consumer rental purchase agreement, or a
transaction pursuant to open-end credit:
a. If the prepayment is in full, the creditor may collect or retain a minimum charge not
exceeding five dollars in a transaction which had an amount financed of seventy-five dollars
or less, or not exceeding seven dollars and fifty cents in a transaction which had an amount
financed of more than seventy-five dollars, if the minimum charge was contracted for, and the
finance charge earned at the time of prepayment is less than the minimum charge contracted
for. If, however, acreditorhascollectedaservicechargeinassociationwithaconsumercredit
transaction pursuant to section 537.2501, subsection 1, paragraph “l”, the creditor shall not
collect or retain a minimum charge upon prepayment pursuant to this subsection.
b. If the prepayment is in part, the creditor may not collect or retain a minimum charge.
4. For the purposes of this section, the following defined terms apply:
a. “Computational period” means the interval between scheduled due dates of
installments under the transaction if the intervals are substantially equal or, if the intervals
are not substantially equal, one month if the smallest interval between the scheduled due
dates of installments under the transaction is one month or more, and otherwise one week.
b. The “interval” between specified dates means the interval between them including one
or the other but not both of them. If the interval between the date of a transaction and the due
date of the first scheduled installment does not exceed one month by more than fifteen days
when the computational period is one month, or eleven days when the computational period
is one week, the interval may be considered by the creditor as one computational period.
5. This section does not preclude the collection or retention by the creditor of delinquency
charges under section 537.2502.
6. If the maturity is accelerated for any reason and judgment is obtained, the consumer is
entitled to the same rebate as if payment had been made on the date maturity is accelerated.
7. Uponprepaymentinfullofaprecomputedconsumercredittransactionbytheproceeds
of consumer credit insurance, the consumer or the consumer’s estate is entitled to the same
rebate as though the consumer had prepaid the agreement on the date the proceeds of the
insurance are paid to the creditor, but no later than ten business days after satisfactory proof
of loss is furnished to the creditor.
8. This section does not apply to a financial institution as defined in section 537.1301.
9. This section does not apply to a service charge collected pursuant to section 537.2501,
subsection 1, paragraph “l”.
10. Notwithstanding any provision of this chapter to the contrary or an agreement
between a motor vehicle dealer licensed under chapter 322 and the consumer, if the creditor
is a financial institution as defined in the Iowa consumer credit code, chapter 537, or the
federal Gramm-Leach-Bliley Act of 1999, 15 U.S.C. §6801 et seq., who has purchased a
retail installment contract as defined in section 322.2, subsection 23, with voluntary debt
cancellation coverage, the only obligation of the creditor upon prepayment in full shall be to
notifythemotorvehicledealerwithinthirtydaysoftheprepayment. Themotorvehicledealer
shall promptly determine whether the consumer is eligible for a refund of any voluntary debt

cancellation coverage and shall issue any refund required directly to the consumer within
sixty days of the dealer’s receipt of notice of the prepayment from the creditor.

Legislative History

[C66, 71, 73, §536.13(7), 536A.26; C75, 77, 79, 81, §537.2510]