§ 6244 — Refinance charges

(a) General rule.--

(1) A holder of an installment sale contract may:

(i) extend the scheduled due date or defer the scheduled payment of all or part of an unpaid installment payment;

(ii) renew the unpaid time balance of the contract; or

(iii) contract for, receive and collect a refinance charge for an extension, deferment or renewal under subparagraphs (i) and (ii).

(2) A refinance charge for a motor vehicle under section 6243(d) and (e) (relating to finance charges) may not exceed the amount determined under this section.

(b) Rates and computation.--

(1) For a motor vehicle under section 6243(d)(1) and (e), the refinance charge shall be determined by either of the following:

(i) Subject to subsection (c), the refinance charge on the amount of a refinanced full or partial installment payment for which each full or partial payment is extended or deferred may not exceed the equivalent of the following rates:

(A) One percent per month for a vehicle under section 6243(d)(1).

(B) One and one-half percent per month for a vehicle under section 6243(e)(1).

(C) Two percent per month for a vehicle under section 6243(e)(2).

(ii) Subject to subsection (d), the refinance charge on the amount obtained shall be determined by:

(A) Adding the unpaid time balance of the contract, insurance charges, other charges incidental to refinancing and unpaid late charges that may be accrued.

(B) Deducting a rebate that may be due to the buyer for prepayment incidental to refinancing, at the rate of the finance charge in the original contract, for the term of the renewal contract and subject to the provisions of this chapter governing computation of the original finance charge.

(2) For a motor vehicle under section 6243(d)(2) and (3), the refinance charge shall be determined by the method of computation under paragraph (1)(ii).

(3) For a manufactured home under section 6243(c), the refinance charge shall be determined by regulation of the Federal Housing Administration pursuant to the National Housing Act (48 Stat. 1246, 12 U.S.C. § 1701 et seq.).

(4) Subject to paragraph (3), if the refinancing of a motor vehicle is insured or guaranteed in whole or in part by the Department of Veterans Affairs or another Federal department or agency, the laws or regulations that govern the Federal department or agency regarding the maximum refinance charge and rate of interest for the refinancing shall govern.

(c) Fractional month.--A computed refinance charge under subsection (b)(1) may be computed on the basis of a full month for any fractional month period in excess of ten days.

(d) Other provisions not applicable to computation.--The provisions of this chapter governing minimum prepayment rebate shall not apply in calculating refinance charges on the contract renewed under subsection (b)(2).

(e) Prohibited contents.--Except as provided in subsection (f) and subject to subsection (g), the holder of an installment sale contract may not include in a refinancing contract a cash loan to the buyer or credit extended to the buyer incidental to the purchase of goods or services.

(f) Permissible contents.--A holder under subsection (e) may include the following in the refinance contract:

(1) Charges for accessories, equipment and parts for the motor vehicle sold under the contract.

(2) Charges for repairs and services to the motor vehicle.

(3) Finance charges.

(g) Loan.--

(1) A loan under subsection (e) shall not include and nothing in this chapter shall be construed to otherwise prohibit a rearrangement of payments under an installment sale contract by a refinance transaction involving a restoration of certain installment payments made under the contract.

(2) A refinance charge on an amount restored pursuant to paragraph (1) may not exceed the equivalent of 6% simple interest per year.