§ 16a-2-103 — Computation of finance charges

(1) The provisions of this section shall apply to all consumer loans and all consumer credit sales.
(2) The finance charge on a consumer loan or consumer credit sale shall be computed in accordance with the actuarial method using either the 365 / 365 method or, if the consumer agrees in writing, the 360 / 360 method:
(a) The 365 / 365 method means a method of calculating the finance charge whereby the contract rate is divided by 365 and the resulting daily rate is multiplied by the outstanding principal amount and the actual number of days in the computational period.
(b) The 360 / 360 method means a method of calculating the finance charge whereby the contract rate is divided by 360 and the resulting daily rate is multiplied by the outstanding principal amount and the number of assumed days in the computational period. For the purposes of this subsection, a creditor may assume that a month has 30 days, regardless of the actual number of days in the month.
(c) If the documentation evidencing a consumer credit contract is silent regarding whether the 365 / 365 method or the 360 / 360 method applies, then the 365 / 365 method shall apply.
(3) The finance charge on a consumer loan or consumer credit sale may not be computed in accordance with the 365 / 360 method, whereby the contract rate is divided by 360 and the resulting daily rate is multiplied by the outstanding principal amount and the actual number of days in the computational period.
(4) Creditors may ignore the effect of a leap year in computing the finance charge.
(5) (a) Except for any portion of a loan made pursuant to a lender credit card which does not represent a cash advance, interest or other periodic finance charges on a consumer loan may accrue only on that portion of the principal which has been disbursed to or for the benefit of the consumer.
(b) On a consumer credit sale, interest or other periodic finance charges may accrue only on that portion of the principal which relates to goods or services that have been shipped, delivered, furnished or otherwise made available to or for the benefit of the consumer or have been disbursed to or for the benefit of the consumer.

Legislative History

L. 1993, ch. 200, § 1; L. 1999, ch. 107, § 9; L. 2005, ch. 144, § 8; L. 2024, ch. 6, § 38; January 1, 2025.