44-1205. Closed end loans of five thousand dollars or less; revolving accounts; check loan accounts; credit card revolving account; delinquency charges; prepayment rebates and additional charges; definition

A. The following apply to closed end loans, other than closed end loans subject to title 6, chapter 5, in which the principal amount of the loan does not exceed five thousand dollars:

1. Interest not to exceed the maximum rate set by contract may be charged. Interest may be computed either at the single annual percentage rate using the actuarial method or it may be precomputed on the assumption that all payments will be made in the amounts and on the dates scheduled and added to the principal of the loan. If interest is precomputed, the fact that payments are made either before or after the date due does not affect the amount of interest which the lender may charge or receive. If such precomputed interest loan balance is prepaid in full by cash, a new loan, refinancing or otherwise, the lender or holder shall charge only for interest which has been earned and unpaid late or delinquency charges as of the date of prepayment, and the borrower shall receive a rebate of that portion of the precomputed interest which is the difference between the total precomputed interest charges and the charges at the contract interest rate computed on the unpaid principal balance based on the number of days or months to maturity based on either a thirty-day month-three hundred sixty day year or daily three hundred sixty-five or three hundred sixty-six day year on the number of days remaining to final maturity. The amount of such rebate shall not be computed pursuant to the method commonly known as the "rule of 78's". To simplify the calculation of earned interest, it is permissible to assume that all payments were made as originally scheduled or as otherwise mutually agreed.

2. It is permissible to calculate interest on an annual basis of twelve months of thirty days each, or on a daily basis if a day is counted either as 1/360th, 1/365th, or 1/366th of a year, as the lender and borrower may agree by writing. The lender may also charge a late payment or delinquency charge, in addition to all interest charges permitted, on each installment not paid in full within ten days of its due date in an amount not to exceed five per cent of the installment or ten dollars, whichever is less.

B. Except as provided in subsection C of this section, revolving accounts in which the agreed upon credit limit does not exceed ten thousand dollars are subject to the provisions of this subsection. Under a revolving loan account of any lender, other than a consumer revolving loan subject to title 6, chapter 5, or resulting from a check loan account, which the borrower may pay at any time but has the privilege of paying in installments, if the interest charge is not precomputed, interest not to exceed the maximum rate set by contract may be charged on the unpaid balances of the account, calculated as of the regular monthly billing date or on the actual daily balances outstanding. The lender may also charge a late payment or delinquency charge on each installment not paid in full within ten days of its due date in an amount not to exceed five per cent of the installment or ten dollars, whichever is less. If a lender makes a loan to a borrower by purchasing or satisfying obligations of the borrower pursuant to a lender credit card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount shall not be considered to be interest. If an arrangement constitutes both a revolving loan account under this subsection and a retail installment transaction under section 44-6001, it is governed by this subsection or section 44-6002 as the parties may agree.

C. Except as provided in subsection D of this section a credit card revolving account, including an account that permits access by check, is governed by the laws of this state and is subject to this subsection. Under a credit card revolving account, which the borrower may pay at any time but has the privilege of paying in installments, interest not to exceed the maximum rate set by contract may be charged on the unpaid balances of the account, calculated as of the regular monthly billing date or on the actual or average daily balances outstanding. If the contract provides, the issuer or holder of a credit card revolving account may charge and collect as interest and include in the balances of the account, in addition to or in lieu of interest on the unpaid balances of the account, any of the following:

1. An annual or other periodic charge.

2. A transaction charge for each separate purchase or loan.

3. A minimum interest charge for each regular billing date on which interest charges are due on the unpaid balances.

4. A late payment or delinquency charge.

5. A returned payment charge.

6. A stop payment charge.

7. An overlimit charge.

8. A charge for providing invoices, checks or documentary evidence.

9. A fee incident to the application for and the opening and administration of the credit card account.

10. An automated teller machine or similar electronic or interchange fee or charge.

If a credit card issuer makes a loan to a borrower by purchasing or satisfying an obligation of the borrower pursuant to the use of a lender credit card or similar arrangement and the purchase or satisfaction is made at less than the face amount of the obligation, the discount is not considered interest.

D. If a contract constitutes either a credit card revolving account under subsection C of this section or a retail charge account agreement as defined in section 44-6001, and the agreed upon credit limit of the account or agreement does not exceed ten thousand dollars it is governed in its entirety by subsection C of this section or section 44-6002 as the parties may agree.

E. The limitations of this subsection apply only to the loans described in subsections A, B and C of this section. In addition to the other charges authorized by subsections A, B and C of this section, the lender may charge the borrower only for the lawful fees actually paid by the lender for filing or recording in a public office, for motor vehicle title, registration, assessor's fees and lien filing fees, for escrow fees of an escrow agent as defined by section 6-801, for acknowledging the instrument securing the loan and for costs of obtaining a preliminary title report and title insurance policy. The lender shall not charge or receive any sums for any other service or expense, except in connection with a loan to a participant or beneficiary from a retirement plan which is qualified under section 401(a) of the internal revenue code as defined in section 42-1001 and except for casualty or other insurance covering the security for the loan and credit life and disability and unemployment insurance, even if actually paid to a third party. This section does not preclude a lender from charging the borrower for the payment of court costs, expenses and reasonable attorney fees if the loan is referred for collection to an attorney other than a salaried employee of the lender or holder. If greater aggregate charges are collected or received on a loan than the maximum charges authorized by this section the loan is usurious.

F. All terms, conditions and other provisions relating to revolving accounts as provided in subsections B, C and E of this section and other lawful provisions of the contract governing the revolving loan account are deemed to be material to the determination of interest applicable to revolving accounts under the laws of this state, the most favored lender doctrine and section 85 of the national bank act (12 United States Code section 85) or section 521 of the depository institutions deregulation and monetary control act of 1980 (12 United States Code section 1831d).

G. Subsection C of this section does not apply to loans made by a person who is a licensee under title 6, chapter 5 or 9, or both, or any affiliate of such a licensee which is not a federally insured depository institution.

H. In this section, "actuarial method" means the method of allocating payments made on a debt between the unpaid principal balance and the interest pursuant to which a payment is applied first to the interest due and any remainder is subtracted from the unpaid principal balance.