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(a) As used in this point:
(1) “Open-end credit score rating strategy” has got the definition established in legislation Z associated with government Reserve System ( 12 C.F.R. 226.2(a)(20) ).
(2) “ Installment loan ” means any loan specified in subdivision (h) offered under an installment mortgage showcase.
(3) “ Installment mortgage element ” suggests an attribute of an open-end credit program which gives for an independent subaccount of open-end credit score rating strategy pursuant to which the key of, and interest on, the borrowed funds connected with that subaccount should be repaid in substantially equal installments over a specific stage without regard to the quantity outstanding under almost every other feature associated with open-end credit arrange or perhaps the payment routine with regards to the some other element.
(b)(1) Except as or else supplied by law, the debtor under any installment loan will probably be eligible to prepay the whole or any an element of the installment financing, as well as any accumulated interest, whenever you want.
(2) regarding any installment financing, little in this point shall prevent a borrower from becoming obligated, by a contract written down, to pay for a prepayment fee; but merely a prepayment generated within 5 years regarding the big date the installment financing is made is likely to be susceptible to a prepayment charge immediately after which only as here set forth. A sum maybe not surpassing 20 percent in the initial major number of the installment loan may be prepaid in just about any one 12-month course without incurring a prepayment cost. A prepayment fee is likely to be implemented on any amount prepaid in every 12-month years over 20 percent of the earliest major amount of the installment financing, which recharge shall not go beyond an amount add up to the fees of half a year‘ advance interest regarding the amount prepaid service more than 20 percent from the earliest major number of the installment loan.
(c) For reason for subdivision (b):
(1) In the event that deed of rely on or mortgage protects repayment in excess of one installment financing, all the installment financial loans will probably be deemed to have come individually generated from the big date the profits associated with installment mortgage include expert.
(2) When the outstanding balance of financing advanced level pursuant to an open-end credit score rating arrange after that turns out to be subject to an installment mortgage element of this credit score rating program, the loan will probably be considered getting come generated when the mortgage turns out to be susceptible to the installment financing showcase, whether or not the feature was actually available at the debtor’s choice under original regards to the open-end credit score rating plan or perhaps the ability thereafter turned offered upon alteration of the initial regards to the open-end credit score rating arrange.
(d) Nonetheless subdivision (b), no prepayment cost are implemented regarding an installment financing at the mercy of this area or no associated with the appropriate employ:
(1) The residential construction securing the installment loan might hurt to such an extent by a normal tragedy which is why a situation of disaster was stated because of the Governor, pursuant to part 7 (starting with part 8550) of unit 1 of Title 2 with the national rule , that the domestic construction are not occupied and also the prepayment was causally relating thereto.
(2) The prepayment is made together with a bona-fide sale of the real belongings securing the installment mortgage.
(3) the financial institution doesn’t conform to subdivision (age).
(4) the definition of from the installment financing is for only five years additionally the original key amount of the installment financing is actually under five thousand money ($5,000).
(e)(1) The lender obtaining a debtor’s responsibility to pay for a prepayment fee authorized by subdivision (b) shall provide the debtor with an authored disclosure describing the existence of the prepayment cost duty, the conditions under that prepayment fee will probably be payable, in addition to method by which the number of the prepayment fee will probably be determined. If subdivision (f) provides the borrower with a right to rescind the installment financing and also the relevant obligation to cover a prepayment fee, the disclosure required by this subdivision shall in addition notify the debtor of this directly to rescind, just how and when to exercise ideal, and locations to post or bring a notice of rescission.