Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 100 of chapter 140 of the General Laws is hereby amended by striking out the second paragraph, as most recently amended by section 1 of chapter 284 of the acts of 1981, and inserting in place thereof the following paragraph:-

The small loans regulatory board shall investigate from time to time the economic conditions and other factors relating to and affecting the business of making loans under sections ninety-six to one hundred and thirteen, inclusive, and shall ascertain all pertinent facts necessary to determine what maximum rate of charge should be permitted. Upon the basis of such ascertained facts, the board shall determine and establish by regulation or order a maximum rate of charge in connection with such loans which will induce efficiently managed commercial capital to be invested in such business in sufficient amounts to make available adequate credit facilities to individuals seeking such loans at reasonable rates, and which will afford those engaged in such business a fair and reasonable return upon the assets. Such maximum rate of charge established by the board may be the aggregate of two or more different maximum rates applicable to different portions of the unpaid principal balance, so that as the size of the loan or the unpaid principal balance increases the aggregate rate decreases. The board may reestablish the maximum monthly rate of charge from time to time on the basis of changed conditions and facts. When the board establishes a maximum rate of charge it shall also by order permit licensees to precompute the monthly rate of charge contracted for on scheduled unpaid principal balances of loans contracted to be repaid in substantially equal and consecutive monthly installments of principal and charges combined with such installments applied to the unpaid balance of principal and the precomputed charge combined, subject to such provisions as the board shall by order prescribe for a refund or credit in the event of prepayment and for extension and default charges in the event of an extension or default. Such refund or credit shall be computed on a method which is at least as favorable to the borrower as the actuarial method, so-called. If the prepayment is made other than on an installment due date, it shall be deemed to have been made on the first installment due date if the payment is before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made. The details of application and the rules for a fraction of a month or partial prepayments shall be subject to the order of the board.

SECTION 2. Section 12G of chapter 255 of the General Laws is hereby amended by striking out the second and third sentences, inserted by section 2 of said chapter 284, and inserting in place thereof the following sentence:- There shall be a refund, in the event of prepayment of the contract, of the charge for such insurance computed on a method which is at least as favorable to the borrower as the actuarial method, so-called.

SECTION 3. Said chapter 255 is hereby further amended by striking out section 13L, inserted by section 3 of said chapter 284, and inserting in place thereof the following section:-

Section 13L. Except as otherwise provided in section one hundred of chapter one hundred and forty, section sixteen of chapter two hundred and fifty-five B, section nineteen of chapter two hundred and fifty-five C, and subsection B of section thirteen of chapter two hundred and fifty-five D, if a loan contract, for personal, family or household purposes, is prepaid in full by cash, a new loan, refinancing or otherwise before the final installment date, the borrower shall receive a refund of the precomputed charges computed on a method which is at least as favorable to the borrower as the actuarial method, so-called. If prepayment is made other than on an installment due date, it shall be deemed to have been made on the first installment due date if the prepayment is before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made.

SECTION 4. Chapter 255B of the General Laws is hereby amended by striking out section 16, as most recently amended by section 4 of said chapter 284, and inserting in place thereof the following section:-

Section 16. Notwithstanding the provisions of any retail installment contract to the contrary, any buyer may pay in full at any time before maturity the debt of any retail installment contract, and in so paying such debt shall receive a refund credit thereon for such anticipation. Such refund credit shall be computed on a method which is at least as favorable to the buyer as the actuarial method, so-called. If the prepayment is made other than on an installment due date, it shall be deemed to have been made on the first installment due date if the payment is before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made.

SECTION 5. Chapter 255C of the General Laws is hereby amended by striking out section 19, as amended by section 5 of said chapter 284, and inserting in place thereof the following section:-

Section 19. Notwithstanding the provisions of any premium finance agreement to the contrary, any insured may pay it in full at any time before maturity of the final installment of the balance thereof, and in so paying such balance shall receive a refund credit thereon for such anticipation. Such refund credit shall be computed on a method which is at least as favorable to the insured as the actuarial method, so-called. If the prepayment is made other than on an installment due date, it shall be deemed to have been made on the first installment due date if the payment is before that date, and in any other case it shall be deemed to have been made on the next preceding or next succeeding installment due date, whichever is nearer to the date of prepayment. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made. The details of application and the rules for partial prepayments shall be subject to the regulations issued under the provisions of section one hundred and sixty-two B of chapter one hundred and seventy-five.

SECTION 6. Subsection B of section 13 of chapter 255D of the General Laws is hereby amended by striking out the first three sentences, as inserted by section 6 of said chapter 284, and inserting in place thereof the following sentence:- Except as provided in subsection C, a refund credit shall be computed on a method which is at least as favorable to the buyer as the actuarial method, so-called.

SECTION 7. The provisions of this act shall apply only to contracts or agreements entered into on or after the effective date of this act.

SECTION 8. This act shall take effect on March first, nineteen hundred and eighty-six.