§ 45-3-705 — Installment loans and loans for purchase of mobile homes - Interest and charges - Statement of transaction

As to home improvement installment loans or loans for the purchase of mobile homes or other installment loans that associations now or hereafter have the power to make, with repayment in equal, or substantially equal, monthly or other periodic installments over the term of the loan subdivisions (1)-(3) shall apply: (1) Interest computed on the principal amount of the loan for the entire term of the loan at a rate not to exceed six percent (6%) per annum may be either deducted in advance or added to the principal; or in the alternative, interest may be determined and charged in accordance with the actuarial method; provided, that in any event, that the maximum effective rate of interest on the loan shall not exceed eighteen percent (18%) per annum; and provided further, that if the unpaid balance of the loan is either paid or renewed prior to its maturity date, the borrower or other person paying or renewing the loan shall be refunded or credited with unearned interest in an amount that represents at least as great a proportion of the original charge as the sum of the periodical time balances after the date of prepayment bears to the sum of all the periodical time balances under the schedule of payments in the original installment loan; provided, that associations shall not be required to refund or credit any unearned interest where it would result in less than the minimum charge provided in subdivision (2)(E) nor to make a refund or credit where the amount thereof would be less than one dollar ($1.00) for each loan; (2) When interest is charged as provided in subdivision (1), associations shall not make additional charges, either directly or indirectly, except for the following, which charges when so made and collected shall not be deemed interest for any purpose of law: (A) Delinquency charges not to exceed five percent (5%) of any one (1) installment more than fifteen (15) days in arrears; (B) Premiums for insurance required or obtained as security for or by reason of the installment loan; (C) Fees and taxes paid to public officials for filing, recording or releasing any instrument or lien; (D) Reasonable expenses of investigating title or titles to real property securing the loans, if any, including the cost of title insurance and costs of closing the loan; (E) Reimbursement of necessary expenses incurred in securing and collecting the loan, not to exceed four percent (4%) of the gross amount of the loan. The cost of legal process or proceedings and reasonable attorneys' fees may be charges in addition to the above; provided, that any association may make a minimum charge on each loan for interest and charges made pursuant to this subdivision (2)(E) of ten dollars ($10.00) per loan or one dollar ($1.00) per monthly installment, whichever is greater; (3) When an installment loan is made and interest is charged as provided in subdivision (1), any association shall, at the time of closing the loan, provide the borrower with a written statement of the transaction or a copy of the note containing the following information: (A) The original principal amount of the loan; (B) The insurance premium for each type of coverage provided; (C) The amount of fees and taxes paid or to be paid public officials, if any; (D) The total amount of interest and all charges made at or prior to closing pursuant to subdivision (2)(E) and the approximate rate expressed in dollars per one hundred dollars ($100) per year; (E) Other charges, if any; (F) The amount of unpaid balance; and (G) The number, amount and due dates of installment payments scheduled to repay the indebtedness.

Legislative History

Acts 1968, ch. 590, §§ 1, 2; 1969, ch. 227, § 1; 1974, ch. 698, § 5; T.C.A., § 45-1413; Acts 1978, ch. 708, § 6.01; 1979, ch. 206, § 1; T.C.A., §§ 45-1437, 45-3-513; Acts 1981, ch. 210, §§ 1-3.