New Jersey § 17:11c-32

§ 17:11c-32.

a. Notwithstanding the provisions of R.S.31:1-1 or any other law to the contrary, every consumer lender authorized to engage in the consumer loan business may loan any sum of money not

exceeding $50,000, repayable in an installment or installments, and may charge, contract

for , and receive thereon , interest at an annual percentage rate or rates agreed to by the licensee and the

borrower. b. A closed-end consumer loan contract may provide for a variation in the interest

rate in which adjustments to the interest rate shall correspond directly to the movement

of an interest rate index which is readily available to and verifiable by the borrower

and is beyond the control of the lender. No increase during the entire loan term shall result in an interest rate of more

than 6% per annum over the rate applicable initially, nor shall the rate be raised

more than 3% per annum during any 12-month period. The lender shall not be obligated to decrease the interest rate more than 6% over

the term of the loan, nor more than 3% per annum during any 12-month period. If a rate increase is applied to the loan, the lender shall also be obligated to

adopt and implement uniform standards for decreasing the rate. If the contract provides for the possibility of an increase or decrease or both

in the rate, that fact shall be clearly described in plain language, in at least 8-point

bold face type on the face of the contract. No rate increase shall take effect unless (1) at least 90 days prior to the effective

date of the first such increase, or 30 days prior to the effective date of any subsequent

increase, a written notice has been mailed or delivered to the borrower that clearly

and conspicuously describes such increase, and (2) unless at least 365 days have elapsed

without any increase in the rate. Where the loan contract so provides for an increase or decrease in the rate of interest,

the installments may vary in amount, notwithstanding any other law to the contrary,

except that if the rate increases, the borrower may request, and the lender shall

provide for, either an increase in the amount of the installment payment or an extension

of the term of the loan, or some combination of an increase in the amount of the installment

payment and extension of the term. c. An open-end loan agreement may provide that the lender may at any time, or from

time to time, change the terms of the agreement, including the terms governing the

periodic interest rate, calculation of interest or the method of computing the required

amount of periodic installment payments, provided however, that: (1) the periodic interest rate shall not be changed more than once in each billing

cycle; (2) any change in the periodic interest rate shall correspond to the movement of a

market interest rate index specified in the agreement which is readily verifiable

by the borrower and beyond the control of the lender; (3) a change in any term of the agreement, including the periodic interest rate, may

be permitted to apply to any then-outstanding unpaid indebtedness in the borrower's

account, including any indebtedness which shall have arisen from advances obtained

prior to the effective date of the change, so long as that fact is clearly and conspicuously

disclosed in the agreement; (4) if the agreement provides for the possibility of a change in any term of the agreement,

including the rate, that fact shall be clearly described in plain language, in at

least 8-point bold face type on the face of the written notice; and (5) no change in any term of the agreement or of the index specified in the agreement

shall be effective unless: (a) at least 30 days prior to the effective date of the

change, a written notice has been mailed or delivered to the borrower that clearly

and conspicuously describes the change and the indebtedness to which it applies, and

states that the incurrence by the borrower or another person authorized by him of

any further indebtedness under the law to which the agreement relates on or after

the effective date of the change specified in the notice shall constitute acceptance

of the change; and (b) either the borrower agrees in writing to the change or the

borrower or another person authorized by him incurs further indebtedness on or after

the effective date of the change stated in that notice, which indebtedness may include

outstanding balances. Any borrower who fails to use the borrower's account or so to indicate agreement

to the change shall be permitted to pay the outstanding unpaid indebtedness in the

borrower's account in accordance with the terms governing the open-end consumer loan

agreement without giving effect to the change. d. The consumer lender shall notify each affected borrower in a consumer loan agreement

of any change in the manner set forth in the closed-end and open-end agreement governing

the plan and in compliance with the requirements of the federal “Truth in Lending

Act , ” Pub.L.90-321 ( 15 U.S.C. s.1601 et seq. ) , and regulations promulgated thereunder, as in effect from time to time, if applicable. e. The interest and periodic payments for consumer loans at these rates shall be computed

from the standard tables based on the actuarial or annuity method which conforms to

the so-called “United States Rule of Partial Payments,” which provides that interest

shall be calculated whenever a payment is made and the payment shall be first applied

to the payment of interest and if it exceeds the interest due, the balance is to be

applied to diminish principal. If the payment is insufficient to pay the entire amount of interest, the balance

of interest due shall not be added to principal, so as to produce interest thereon. f. No interest on a consumer loan shall be paid, deducted, or received in advance. Interest shall not be compounded and shall be computed only on unpaid principal

balances. For the purpose of computing interest, all installment payments shall be applied

on the date of receipt, and interest shall be charged for the actual number of days

elapsed at the daily rate of 1/365 of the yearly rate. g. No consumer lender shall induce or permit any person nor any husband and wife,

jointly or severally, to become obligated, directly or contingently or both, under

more than one contract of a consumer loan at the same time for the purpose of obtaining

a higher rate of interest than would otherwise be permitted by this section. This prohibition shall not apply to any loan made pursuant to any other law of this

State.