(1) Except as provided in ORS 725.615 and 725.622, a licensee may:
(a) Charge, contract for and receive in connection with a consumer finance loan made in accordance with this chapter a finance charge that, when expressed as an annual percentage rate, does not exceed the greater of:
(A) 36 percent; or
(B) 30 percentage points in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank of San Francisco. The Director of the Department of Consumer and Business Services on the first business day of each calendar year shall determine by order from published sources the discount rate upon which the annual percentage rate set forth in this subparagraph will be based. The annual percentage rate set forth in this subparagraph shall apply to each new loan made during the succeeding 12 months for the entire term of the loan, including all renewals of the loan.
(b) Contract for and receive in connection with a consumer finance loan made in accordance with this chapter, and in addition to the finance charge described in paragraph (a) of this subsection, other reasonable and bona fide fees, expenses or damages, subject to oversight and regulation by the Department of Consumer and Business Services. For purposes of this paragraph, “fees, expenses or damages” includes, but is not limited to:
(A) Items exempted from the computation of the finance charge in accordance with the Truth in Lending Act, 15 U.S.C. 1605(d) and (e), as that Act existed on July 2, 2007, and similar pass-through fees or charges;
(B) Prepayment fees and late fees;
(C) Fees and damages in accordance with ORS 30.701;
(D) Actual expenses the licensee reasonably incurs in collecting a consumer finance loan that the borrower or consumer has failed to repay according to the terms of the consumer finance loan contract; and
(E) Amounts associated with the collection of a defaulted loan that are authorized by statute or awarded by a court of law.
(c) For purposes of this subsection, “finance charge” and “annual percentage rate” have the meanings given those terms in the federal Truth in Lending Act, 15 U.S.C. 1601 et seq.
(2) When a precomputed loan contract is originally scheduled to be repaid in 62 months or less and requires repayment in substantially equal or consecutive monthly installments of principal and interest combined, the interest or consideration may be precomputed, contracted for and earned on scheduled unpaid principal balances on the assumption that all scheduled payments will be made when due. In such cases, every payment may be applied to the combined total of principal and precomputed interest until the contract is fully paid, and the acceptance or payment of interest or consideration on any loan made under the provisions of this subsection is not considered to constitute payment, deduction or receipt thereof in advance. The precomputed interest or consideration is subject to the following adjustments:
(a) When a default of more than 10 days in the payment of any scheduled installment occurs, the licensee may charge and collect a default charge not exceeding five percent of the unpaid amount of the installment or $5, whichever is less. A default charge may be collected only once on an installment, but may be collected at the time it accrues or at any time thereafter. A default charge may not be assessed with respect to an installment which is paid in full on or within 10 days after a scheduled installment due date when an earlier maturing installment or a default or deferral charge on an earlier maturing installment may not have been paid in full even though all or part of such installment payment is applied to an earlier maturing installment, or a default or deferral charge.
(b) If the payment of all unpaid installments is deferred one or more full months, and if the contract so provides, the licensee may charge and collect a deferral charge not exceeding the annual percentage rate specified in subsection (1)(a) of this section and previously disclosed to the borrower pursuant to the federal Truth in Lending Act applied to the sum of the installments deferred for the length of the deferral period. The deferral period is that period in which no scheduled installment is required to be paid by reason of the deferral. The charge may be collected at the time of deferral or at any time thereafter. A deferral charge may not be made for the deferral of any installment with respect to which a default charge has been collected, unless the default charge is deducted from the deferral charge. If prepayment of the loan in full occurs during the deferral period, in addition to any other rebate which may be required, the borrower shall receive a rebate of the portion of the deferral applicable to the unexpired months in the deferral period, for which purpose a fraction of an unexpired month exceeding 15 days is considered to be a month.
(c) Upon prepayment in full of the unpaid balance of a precomputed loan, a rebate of unearned interest or consideration shall be made as provided in this paragraph. The amount of the rebate shall be not less than the total interest contracted for to maturity, less the greater of:
(A) Ten percent of the amount financed or $75, whichever is less; or
(B) The interest or consideration earned to the installment due date nearest the date of prepayment, computed by applying the simple interest rate of the loan to the actual principal balances outstanding, for the periods of time the balances were actually outstanding. For purposes of rebate computations under this subparagraph, the installment due date preceding the date of prepayment is considered to be nearest if prepayment occurs 15 days or less after that installment date. If prepayment occurs more than 15 days after the preceding installment due date, the next succeeding installment due date is considered to be nearest to the date of prepayment. In determining the simple interest rate, the licensee may apply to the scheduled payments the actuarial method, by which each scheduled payment is applied first to accrued and unpaid interest or consideration, and any amount remaining is applied to reduction of the principal balance.
(3) If the borrower agrees to perform certain duties to insure or preserve the collateral and fails to perform those duties, the licensee may pay for the performance of those duties and add the amounts paid to the unpaid principal balance. A charge may be made for sums advanced, at the rate provided for in the loan agreement.
(4) The loan contract may provide that after default and referral the borrower shall pay the licensee for reasonable attorney fees actually paid by the licensee to an attorney not a salaried employee of the licensee. [Amended by 1955 c.71 §13; 1971 c.450 §3; 1973 c.428 §4; 1975 c.567 §2; 1977 c.432 §1; 1979 c.326 §3; 1979 c.879 §7; 1981 c.412 §15; 1981 c.910 §8a; 2006 c.3 §2; 2007 c.473 §3; 2007 c.603 §3a]
Section: Previous 725.310 725.312 725.315 725.317 725.319 725.320 725.330 725.340 725.342 725.345 725.347 725.349 725.350 725.355 725.360 NextLast modified: August 7, 2008