Nebraska § 45-361 - Preauthorized loans; requirements.

§ 45-361. Preauthorized loans; requirements.

(1) A licensee may make preauthorized loans and may contract for and receive charges on such loans as set forth in subsection (1) of section 45-349, subject to the following requirements:

(a) A licensee shall not compound charges by adding any unpaid charges authorized by section 45-349 or this section to the unpaid principal balance of the borrower's account, except that the unpaid principal balance may include additional charges for credit life insurance or credit disability insurance provided in connection with the preauthorized loan, subject to the requirements and restrictions contained in section 45-362;

(b) Charges authorized by section 45-349 or this section shall be deemed not to exceed the maximum charges permitted by such sections if such charges are computed in each billing cycle by any of the following methods:

(i) By converting each graduated monthly rate to a daily rate and multiplying such daily rate by the applicable portion of the daily unpaid principal balance of the account, in which case each daily rate is determined by multiplying the authorized monthly rate by twelve and dividing by three hundred sixty-five;

(ii) By multiplying each graduated monthly rate by the applicable portion of the average daily unpaid principal balance of the account in the billing cycle, in which case the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle; or

(iii) By converting each graduated monthly rate to a daily rate and multiplying such daily rate by the applicable portion of the average daily unpaid principal balance of the account in the billing cycle, in which case each daily rate is determined by multiplying the authorized monthly rate by twelve and dividing by three hundred sixty-five, and the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle; and

(c) For each method of computation set forth in this section, the billing cycle shall be monthly and the unpaid principal balance on any day shall be determined by adding to any balance unpaid as of the beginning of that day all advances and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day.

(2) The borrower under a preauthorized loan may at any time pay all or any part of the unpaid balance in his or her account, or, if the account is not in default, the borrower may pay the unpaid principal balance in monthly installments. Minimum monthly payment requirements shall be determined by the licensee and set forth in the preauthorized loan agreement, except that the minimum monthly payment shall not be less than one and one-half percent of the average daily unpaid principal balance of an account having an average daily balance of more than three thousand dollars nor less than two percent of the average daily unpaid principal balance of an account having an average daily balance of three thousand dollars or less.

(3) A licensee may retain any security interest, including a mortgage on real property, until the preauthorized account is terminated.

(4) Subsection (4) of section 45-345, subsection (3) of section 45-350, and section 45-357 shall not apply to preauthorized loans.

(5) The department may approve record-keeping systems for licensees and may prescribe policies and procedures necessary to the administration of preauthorized loans made pursuant to the Nebraska Installment Loan and Sales Act.