New Jersey § 17:9a-54

§ 17:9a-54.

A. Every installment loan shall be evidenced by a note the face value of which shall

be in an amount determined pursuant to paragraph (11) or (12) of subsection B, of

section 53, 1 as the case may require, and which shall provide for payments to be made at monthly

intervals on the corresponding date in each month. The note may provide for an increase, or may provide for a decrease, or both, in

the rate of interest applicable to such installment loan. 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 note 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 note. No rate increase shall take effect during the first 3 years of the term of the loan,

or thereafter, (a) unless 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 (b) unless at least 365 days have elapsed without any

increase in the rate. 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. If the note does provide that the interest rate may be increased then, notwithstanding

the provisions of section 56 of P.L.1948, c. 67 ( C. 17:9A-56 ), when the unpaid balance owing upon a precomputed loan is repaid in full or the

maturity of the unpaid balance of such loan is accelerated before the date scheduled

for the payment of the final installment, the bank shall allow a credit on account

of the precomputed interest, calculated according to the actuarial refund method,

as if all payments were made as scheduled, or if deferred, as deferred; provided,

however, that if the loan is prepaid within 12 months after the first payment is due,

a bank may charge a prepayment penalty of not more than (a) $20.00 on any loan up

to and including $2,000.00; (b) an amount equal to 1% of the loan on any loan greater

than $2,000.00 and up to and including $5,000.00; and (c) $100.00 on any loan exceeding

$5,000.00. Effective on the first day of the twelfth month following the effective date of this

act, notwithstanding the provisions of section 56 of P.L.1948, c. 67 ( C. 17:9A-56 ) on all loans, when the unpaid balance owing upon a precomputed loan is repaid in

full or the maturity of the unpaid balance of such loan is accelerated before the

date scheduled for the payment of the final installment, the bank shall allow a credit

on account of the precomputed interest, calculated according to the actuarial refund

method, as if all payments were made as scheduled, or if deferred, as deferred; provided,

however, that if the loan is prepaid within 12 months after the first payment is due,

a bank may charge a prepayment penalty of not more than (a) $20.00 on any loan up

to and including $2,000.00; (b) an amount equal to 1% of the loan on any loan greater

than $2,000.00 and up to and including $5,000.00; and (c) $100.00 on any loan exceeding

$5,000.00. Such note may further provide that up to 3 months may elapse between the date of

the loan and the date scheduled for the payment of the first installment, or between

the dates scheduled for the payment of subsequent installments, provided that in any

12-month period there shall be not more than 3 months during which no installment

is scheduled to be paid. B. No installment loan shall be made the final installment of which is scheduled to

be paid more than 12 years and 3 months subsequent to the date upon which such loan

is made. C. No bank shall make any further interest or other charge or demand in connection

with such loan, other than those expressly authorized by this article. D. No bank shall make a Class I installment loan for the payment of which any person

shall be liable to the bank in any capacity, if the amount of such Class I installment

loan, and the amounts of the unpaid balances owing to the bank on all other Class

I installment loans for the payment of which such person is liable to the bank, will

in the aggregate exceed $20,000.00 exclusive of interest and other charges, nor shall

any bank make a Class II installment loan for the payment of which any person shall

be liable to the bank in any capacity, if the amount of such Class II installment

loan, and the amounts of the unpaid balances owing to the bank on all other Class

II installment loans for the payment of which such person is liable to the bank, will

in the aggregate exceed $25,000.00 exclusive of interest and other charges. E. (Deleted by amendment; (P.L.1981), c. 103.) F. Nothing in this section or elsewhere in this article contained shall prevent a

bank from making an installment loan, the proceeds of which will be applied in whole

or in part to the repayment at or before final maturity of a loan theretofore made

under the provisions of this article or otherwise. 1

N.J.S.A. § 17:9A-53.