New Jersey Revised Statutes § 17:9a-55 - Permissible Provisions And Actions

17:9A-55. Permissible provisions and actions
A. A bank which makes an installment loan may

(1) require one or more comakers or endorsers of the note evidencing the loan, or one or more guarantors of payment of the loan, and, prior to default, take as security for any such loan an interest in either tangible personal property or real property. After default, an interest in personal property, tangible and intangible, and in real property may be taken as security for a Class I installment and a Class II loan. An interest in real property taken as security for an installment loan shall not be deemed a mortgage loan within the meaning of section 181 or article 14;

(2) when the payment of such loan is secured, require that any property constituting such security be insured for the benefit of the bank, against such loss or damage as the bank may require, and may retain out of the proceeds of such loan the premium for such insurance. The bank may further require that all taxes, assessments, water rents and other governmental charges against such property be paid when due and that the security be maintained free of all executions, levies, encumbrances and other charges which adversely affect the value of the bank's interest in such security. If such insurance expires, lapses, or is canceled, and other insurance by insurers and in amounts satisfactory to the bank is not furnished to the bank without lapse of coverage, or if such taxes, assessments, water rents or other governmental charges are not paid when due, or if any execution, levy, encumbrance or other charge which adversely affects the value of the bank's interest in such security is not paid or otherwise removed, the bank may, but shall be under no duty to, obtain such insurance upon such property, or pay the amount of any such tax, assessment, water rent or other governmental charge or pay the amount of such execution, levy, encumbrance or other charge. The amount paid by the bank for such insurance, less the amount of the return premium, if any, received by the bank on cancellation of prior insurance paid for by the borrower or the cost of which was retained out of the proceeds of the loan, together with the amount, if any, paid by the bank for such tax, assessment, water rent or other governmental charge, shall be added to and become part of such loan, payable upon demand with interest at the rate charged on the loan so secured; and, in default of such payment within 30 days after such demand, the entire unpaid balance of the loan shall, at the election of the bank, become immediately due and payable;

(3) upon institution of a suit for the collection of an installment loan in default, charge a collection fee, in addition to court costs allowable by law, equal to 10% of the unpaid balance of the loan, but not more than $100.00;

(4) when the payment of such loan is secured, and provision is made by law for the filing or recording of the instrument of security or notice or abstract thereof, require compliance with such provision and retain the cost of such recording or filing out of the proceeds of the loan;

(5) In connection with a precomputed installment loan, defer the scheduled due date or dates of any installment payment or payments, and, as a consideration therefor make an additional charge at a rate not exceeding 1% per month computed on the amount of the scheduled installment payment or payments deferred for the period or periods for which each such installment payment or part thereof is so deferred.

B. A note evidencing an installment loan, or an instrument providing for the securing of an installment loan, may provide that

(1) upon default in the payment of an installment on its due date, or upon default in any other term or provision contained in any note evidencing an installment loan, or in any security agreement given in connection with any installment loan, the entire unpaid balance of such loan shall, at the election of the bank, become immediately due and payable;

(2) when the maturity of the unpaid balance of an installment loan is accelerated as provided by this section, the bank may charge interest upon such unpaid balance from the date such acceleration takes place at a rate not exceeding the rate charged on the loan;

(3) on any installment of a precomputed installment loan in arrears for more than 15 days, the bank may make a late charge which shall not exceed 5% of such installment, or $5.00, whichever is the lesser; provided, that only one such late charge shall be made on any one installment, and that no such late charge shall be made upon any installment scheduled, by the terms of such note or instrument, to fall due upon a date subsequent to the date upon which the maturity of the unpaid balance of the loan is accelerated as provided by this section;

(4) no person who is a party to the note evidencing the loan or to any instrument securing such loan shall be released or discharged from liability to the bank by reason of the bank's extending the time for the payment of an installment or installments owing or due upon such loan, or by reason of the bank's waiver of any term or condition of such note or of the instrument securing the payment thereof;

(5) all parties to the note evidencing the loan shall waive presentation for payment, demand for payment, protest and notice of protest, nonpayment, dishonor, and the bank's election to accelerate the maturity of the unpaid balance of the loan.

C. (Deleted by amendment.)

L.1948, c. 67, p. 236, s. 55. Amended by L.1950, c. 311, p. 1056, s. 3; L.1953, c. 237, p. 1718, s. 1; L.1955, c. 129, p. 612, s. 1; L.1965, c. 171, s. 9; L.1976, c. 128, s. 3, eff. Dec. 21, 1976.


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Last modified: October 11, 2016