§ 6.1-330.85. Prepayment of loan described in { 6.1-330.71; rebates for unearned interest
A. Any borrower under any loan described in § 6.1-330.71 shall have the right to anticipate payment of his debt in whole or in part at any time. As agreed to by the borrower, a lender may contract for a penalty for prepayment of the full amount of the loan, but such prepayment penalty shall not exceed two percent of the principal amount prepaid. However, such prepayment penalty may not be imposed if (i) the loan is refinanced or consolidated with the same lender or a subsequent noteholder or (ii) the loan is accelerated due to default. No penalty shall be charged in the event of partial prepayment or in the case of an open-end credit plan where there is a payment of the outstanding balance without a demand to release the subordinate deed of trust or mortgage. In cases where interest has been added to the face amount of a note payable in installments, the borrower shall have the right to a rebate of any unearned interest, which rebate shall be computed in accordance with the Rule of 78 as illustrated in § 6.1-330.86 on loans (i) with an initial maturity and corresponding amortization period of sixty-one months or less and (ii) payable in equal periodic installments. On loans with an initial maturity of more than sixty-one months, the borrower shall receive a rebate computed under a method at least as favorable to the borrower as the actuarial method.
B. The provisions of this section shall not apply to any loan made by any lender enumerated in § 6.1-330.73.
(1987, c. 622; 1990, c. 338; 1991, c. 171; 1998, c. 89.)
Sections: Previous 6.1-330.78:1 6.1-330.79 6.1-330.80 6.1-330.81 6.1-330.82 6.1-330.83 6.1-330.84 6.1-330.85 6.1-330.85:1 6.1-330.86 6.1-330.86:1 6.1-330.87 6.1-330.88 6.1-330.89 6.1-330.90 NextLast modified: April 16, 2009