Texas § FI.342.352 - REFUND OF PRECOMPUTED INTEREST ON CONTRACT

§ FI.342.352. REFUND OF PRECOMPUTED INTEREST ON CONTRACT

REFUND OF PRECOMPUTED INTEREST ON CONTRACT: SCHEDULED INSTALLMENT EARNINGS. (a) This section applies to a loan contract: (1) that includes precomputed interest and to which Section 342.351 does not apply; (2) that includes interest contracted for under Section 342.201 or 342.260 ; or (3) that has a term of more than 60 months. (b) If the contract is prepaid in full, including payment in cash or by a new loan or renewal of the loan, or if the lender demands payment in full of the unpaid balance before final maturity of the contract, the lender earns interest for the period beginning on the date of the loan and ending on the date of the prepayment or demand, as applicable, an amount that does not exceed the amount allowed by Subsection (f) using the simple annual interest rate under the contract. (c) If prepayment in full or demand for payment in full occurs during an installment period, the lender may retain, in addition to interest that accrued during any elapsed installment periods, an amount computed by: (1) multiplying the simple annual interest rate under the contract by the unpaid principal balance of the loan determined according to the schedule of payments to be outstanding on the preceding installment due date; (2) dividing 365 into the product under Subdivision (1); and (3) multiplying the number of days in the period beginning on the day after the installment due date and ending on the date of the prepayment or demand, as appropriate, by the result obtained under Subdivision (2). (d) The lender may also earn interest on an addition to principal, or other permissible charges, added to the loan after the date of the loan contract, accruing at the simple annual interest rate under the contract from the date of the addition until the date paid or the date the lender demands payment in full of the total unpaid balance under the loan contract. (e) The lender shall refund or credit to the borrower the amount computed by subtracting the total amount retained under Subsections (b), (c), and (d) from the total amount of interest contracted for and precomputed in the amount of the loan. (f) For the purposes of this section, the simple annual interest rate under a contract is equal to the rate computed under the scheduled installment earnings method. Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.19(a), eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 916, Sec. 3, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 916, Sec. 4, eff. Sept. 1, 2001. Amended by: Acts 2013, 83rd Leg., R.S., Ch. 784 (S.B. 1251 ), Sec. 6, eff. September 1, 2013.