§969.20. Rebates upon prepayment; prepayment charges; return of lien documents upon
payment in full of the balance due
A. Upon prepayment in full of a precomputed transaction, the extender of credit shall
refund unearned precomputed loan finance charges or credit service charges, and such refund
shall represent at least ninety percent as great a portion of the loan finance charge or credit
service charge, after first deducting from such precomputed charge a prepayment charge of
not more than twenty-five dollars, as the sum of the monthly time balances beginning one
month after the month in which prepayment is made, bears to the sum of all the monthly time
balances under the schedule of payments in the contract. This method of rebate upon
prepayment is commonly referred to as the "Rule of 78's" or the "Sum of Digits" rebate
method. If more than one-half of the term of the precomputed transaction has elapsed, the
rebate shall be computed without deducting a prepayment charge. For the purposes of rebate
upon prepayment, deferral charges are not required to be rebated. No rebate less than one
dollar, or to the extent provided for by federal law, is required.
B. An extender of credit may charge the consumer a twenty-five dollar prepayment
charge upon prepayment in full of a simple interest transaction. The extender of credit must
include a contractual covenant in the consumer's contract under which the consumer agrees
to pay such a prepayment charge.
C.(1) There is no requirement that prepaid finance charges be rebated upon
prepayment in full of a simple interest transaction, provided that all of the following
conditions are satisfied:
(a) The original amount financed or amount deferred was five thousand dollars or
more.
(b) The original scheduled term of the transaction was twenty-four months or longer.
(c) Other than in connection with a credit transaction involving a factory-built home,
prepaid finance charges assessed under the transaction did not exceed five percent of the
original amount financed or amount deferred.
(2) Where any one or more of the conditions in Paragraph (1) of this Subsection are
not satisfied, prepaid finance charges shall be subject to rebate upon prepayment in full of
a simple interest transaction under the same method as provided in Subsection A of this
Section.
D.(1) If the lender or holder of the retail installment contract receives from the
consumer or the consumer's designee payment in full in an amount in accordance with the
outstanding balance information, then the lender or holder of the retail installment contract
shall accept the amount as payment in full, release the lender's or the retail installment
contract holder's lien against the motor vehicle, and return the title or a lien satisfaction
certification no later than the fourteenth day after the date upon which payment in full is
received at the location designated by the lender or holder of the retail installment loan for
such payments. If the lender or holder of the retail installment loan fails to return the title
to the consumer or the consumer's designee within the specified time period, then the lender
or holder of the retail installment contract shall provide sufficient funds to the consumer or
the consumer's designee in order to obtain a duplicate title no later than fourteen days after
payment in full is received at the location designated by the lender or holder of the retail
installment contract for such payments.
(2) For the purposes of this Subsection, a payment in cash or certified funds shall be
deemed to be received on the date that the lender or holder of the retail installment contract
receives payment. All other forms of payment shall be deemed to be received on the date
that the lender or the holder of the retail installment loan receives notice that the financial
institution upon which payment is drawn has honored the payment.
Acts 1999, No. 794, §1, eff. July 2, 1999; Acts 2008, No. 236, §1; Acts 2024, No.
287, §1.