(a) A borrower shall be entitled to a refund of the unearned interest that has been paid in advance when a precomputed loan is paid in full or refinanced prior to maturity, or on which judgment has been obtained:
Terms Used In Hawaii Revised Statutes 412:9-306
Company: means any corporation, partnership, trust (business or otherwise), association, joint venture, pool syndicate, unincorporated organization, or any form of business entity not specifically listed herein and, unless specifically excluded, a financial institution; provided that "company" does not mean any trust existing on July 1, 1993, which under its terms must terminate within twenty-five years, or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust. See Hawaii Revised Statutes 412:1-109
Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
(1) The amount of the refund on a loan with an original term of sixty months or less shall be computed under a method no less favorable to the borrower than the Rule of 78ths method (also known as the Sum of the Digits method). The refund shall represent at least as great a proportion of the total finance charge as the sum of the periodical time balances, after the day of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the loan agreement;(2) If the original term of a precomputed loan exceeds sixty months, the amount of refund of unearned interest shall be equal to the difference between the total interest originally charged and the actuarially earned amount;(3) Refunds on precomputed loans originated prior to July 1, 1993, shall be made in accordance with the terms of existing loan agreements, provided that the refund provision complied with applicable law at the consumer loan origination.(b) No refund less than $1 need be made and the financial services loan company shall not be required to refund any portion of the unearned interest that has been paid in advance which results in a minimum interest retained on the precomputed loan of less than $15.
