(a) Disclosures for commercial open-end credit plans provided in accordance with section 22802 of the code, except open-end credit plans described in section 900, subdivision (a)(5)(C), shall comply with the following requirements.
(1) The provider shall present the disclosures in a table consisting of ten rows and three columns.
(2) In the first row, the first, second and third columns shall be combined, and the resulting cell shall have only the following language, in italics:
(A) If the contract allows only for a single payment option: “The calculations below are based on an initial draw of your full Approved Credit Limit of [approved credit limit] and assume that you will pay off the draw entirely according to the agreed payment schedule, that you miss no payments, and that you do not redraw on this line. Actual costs may differ substantially.”
(B) If the contract allows for multiple payment options: “The calculations below are based on an initial draw of your full Approved Credit Limit of [approved credit limit] and assume that you will choose to make minimum payments, that you miss no payments, and that you do not re-draw on this line. Actual costs may differ substantially.”
(C) If the amount borrowed is payable on demand, the provider shall include a short explanation that amounts borrowed are payable on demand and that the estimate assumes a term of one year.
(D) If an alternate maturity date is stated in the legal obligation between the parties, then the provider shall include a short explanation that the disclosure is based upon that maturity date.
(3) The second row of the table shall include only the following information:
(A) In the first column: “Funding Provided”.
(B) In the second column, the amount financed.
(C) In the third column, in the order listed and in one paragraph:
(i) “This is the maximum amount of funding [name of financer] may provide.”
(ii) If the amount financed is greater than the recipient funds: “Due to deductions or payments to others, the total funds that will be provided to you directly if you request the maximum amount is [recipient funds]. For more information on what amounts will be deducted, please review the attached document “Itemization of Amount Financed.””
(iii) If any portion of the amount financed will be used to pay down or pay off other amounts owed by the recipient that may change over time, and the amounts owed are known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change if the amount owed for the recipient's other obligations changes.
(iv) If, as a condition of the financing, a recipient's amounts owed to third parties must be paid down or paid off using funds from the amount financed, and an amount owed is not known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change based upon the required disbursements to satisfy other obligations.
(4) The third row of the table shall include the following information:
(A) In the first column:
(i) If the contract provides for a fixed interest rate or rates that are predetermined by the contract: “Annual Percentage Rate (APR)”.
(ii) If the contract provides for an adjustable interest rate and it is not possible to calculate the interest rates throughout the term of the transaction in advance: “Initial Annual Percentage Rate (APR)”.
(B) In the second column, the provider's calculation of the annual percentage rate calculated in accordance with section 940.
(C) In the third column:
(i) If the contract provides for a single, fixed interest rate:
“APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and fees you pay and the payments you make.
APR is not an interest rate. Your interest rate is [interest rate]. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges.”
(ii) If the contract provides for multiple pre-determined interest rates that change over time:
“APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and fees you pay and the payments you make.
Your APR is not an interest rate. Your initial interest rate is [initial interest rate]. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges.”
(iii) If the contract provides for an adjustable interest rate and it is not possible to calculate the interest rates throughout the term of the transaction in advance:
“APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and fees you pay and the payments you make.
APR is not an interest rate. Your initial interest rate is [initial interest rate]. Although your interest rate will adjust over time, for the purposes of calculating this APR estimate, we have used the initial interest rate for future periods where the interest rate is not preset by the contract. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges.”
(iv) If no part of the finance charge is based upon an interest rate:
“APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, fees you pay and the payments you make.
APR is not an interest rate. The cost of this financing is based upon fees charged rather than interest that accrues over time.”
(5) The fourth row of the table shall include only the following information:
(A) In the first column: “Estimated Finance Charge”.
(B) In the second column, the total finance charge calculated in accordance with section 943.
(C) In the third column:
(i) “This is the dollar cost of our financing based upon the assumptions described at the top of this disclosure.”
(ii) If the contract provides for an adjustable interest rate or rates that are not predetermined by the contract: “The interest rate under your contract will adjust over time, so your actual finance charge may vary.”
(6) The fifth row of the table shall include only the following information:
(A) In the first column: “Estimated Total Payments”.
(B) In the second column, the total estimated payments the recipient will make during the term of the contract if the recipient makes minimum required payments.
(C) In the third column: “This is the total dollar amount of payments you will make during the term of the contract based upon the assumptions described at the top of this disclosure.”
(7) The sixth row of the table shall include only the following information:
(A) In the first column: “Estimated Payment”.
(B) If periodic payments during the term of the transaction will not vary over the term of the transaction:
(i) In the second column, the amount of the periodic payment followed by a forward slash (/) and the frequency of each periodic payment followed by the date and amount of any irregular payments listed in chronological order.
(ii) In the third column, a short explanation of when each payment will become due.
(C) If periodic payments during the term of the transaction vary and it is possible to calculate the payment amounts in advance, the second and third columns in the fifth row shall be combined and the provider shall list the periodic payment and when each amount will become due followed by the date and amount of any irregular payments listed chronological order and any assumptions made when calculating the payment amounts. For example:
Months 1-12: $600/month
Months 13-24: $1200/month
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
(D) If periodic payments during the term of the transaction vary and it is not possible to calculate all payment amounts in advance because the transaction has an adjustable interest rate that cannot be calculated in advance:
(i) In the second column, a periodic payment amount calculated using the initial interest rate followed by the date and amount of any reasonably anticipated irregular payments listed in chronological order.
(ii) In the third column, a short explanation that the periodic payment amount disclosed is based upon the initial interest rate, and that the actual rate may change over time. The provider may also include a short explanation describing when the payment will adjust and how it will be calculated.
(E) If periodic payments of principal during the term of the transaction do not vary but periodic payments of interest during the term of the transaction vary, and it is not possible to calculate all interest payment amounts in advance because the transaction has an adjustable interest rate that cannot be calculated in advance:
(i) In the second column, the phrase “Initial Interest Payment:” followed by an interest payment amount calculated using the initial interest rate, followed by a forward slash (/) and the frequency of each periodic interest payment.
(ii) In the second column, beneath the disclosure required by subdivision (a)(7)(E)(i), the phrase “Principal Payment Amount:” followed by the amount of each periodic principal payment, followed by a forward slash (/) and the frequency of each periodic principal payment.
(iii) In the third column, a short explanation that the Initial Interest Payment Amount disclosed is based upon the initial interest rate, and that the actual rate may change over time.
(iv) In the third column, beneath the statement explaining the Initial Interest Payment Amount and at the same height as the disclosure required under subdivision (a)(7)(E)(ii), a short explanation of the principal payment amount and frequency.
(8) The seventh row of the table shall include only the following information:
(A) In the first column: “Draw Period”.
(B) In the second column, the draw period for the transaction.
(C) In the third column, a short explanation of the draw period for the transaction.
(9) The eighth row of the table shall include no information in the third column, and the remaining columns shall include only the following information:
(A) In the first column: “Term”.
(B) In the second column, the term of the transaction.
(10) In the first column, the ninth and tenth rows shall be combined and shall include only the following language: “Prepayment”.
(11) In the ninth row, the second and third columns shall be combined and shall include only:
(A) If, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay finance charges other than interest accrued since the recipient's last payment, the following statement: “If you pay off the financing early you will need pay all or portion of the finance charge, up to $[maximum non-interest finance charge].”
(B) In all other cases, “If you pay off the financing early, you will not need to pay any portion of the finance charge other than unpaid interest accrued (if applicable).”
(12) In the tenth row, the second and third columns shall be combined and shall include only:
(A) If, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay additional fees and charges not included in the finance charge, the following statement: “If you pay off the financing early you must also pay the following additional fees:” followed by the amounts and descriptions of the additional fees and charges.
(B) In all other cases, the following statement: “If you pay off the financing early you will not pay additional fees.”
(13) If the contract provides for periodic payments that are not monthly, the provider shall insert one additional row below the fifth row, and the additional row shall include only the following information:
(A) In the first column: “Average Monthly Cost”.
(B) In the second column, the average monthly cost that the recipient will pay over the term of the transaction.
(C) In the third column: “Although this financing does not have monthly payments, this is our calculation of your average monthly cost for comparison purposes.”
Credits
Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802, 22803 and 22804, Financial Code.
History
1. New section filed 6-9-2022; operative 12-9-2022 pursuant to Government Code section 11343.4(b)(2) (Register 2022, No. 23). Transmission deadline specified in Government Code section 11346.4(b) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20.
This database is current through 7/12/24 Register 2024, No. 28.
