Sec. 41.
Instead of a finance charge computed on the principal amount financed, the seller may charge from time to time a finance charge consisting of interest on the amount of the unpaid principal balance of the contract. In this event, the transaction is subject to this act as modified by the following provisions:
(a) The number and amount of installment payments required to be stated pursuant to section 13 may be estimated for purposes of this section assuming that each scheduled payment is made on the date it is due and in the scheduled amount.
(b) The holder of the contract has the option of deferring interest charges which accrue due to installment payments being received later than the periodic installment due date. The deferred interest charge shall be computed on the basis of additional interest charges accruing for late installment payments and appropriate interest reductions for installment payments made before the due date. On contracts providing for equal monthly installments, if the final installment is more than 105% of a previous installment as a result of the deferred interest charges, the installment buyer shall be given the option to pay the deferred interest charges not less than 25 days after the date the last installment payment is due.
(c) If the unpaid time balance is prepaid in full, together with all interest incurred to the date of prepayment, the balance of the original finance charge shall be canceled and the finance charge rebate provisions of section 21 do not apply.
History: Add. 1978, Act 98, Imd. Eff. Apr. 5, 1978 ;-- Am. 1995, Act 166, Eff. Mar. 28, 1996
Last modified: October 10, 2016