(a) Every credit sale contract which provides for the extension of open-end credit primarily for a personal, family, or household purpose shall disclose the annual percentage rate of the finance charge to be imposed under the contract, the circumstances under which the finance charge will be imposed, and an explanation of how the finance charge will be determined.

Terms Used In Hawaii Revised Statutes 476-4

  • Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
  • Contract: A legal written agreement that becomes binding when signed.
  • 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
  • Open-end credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or revolving credit.) Source: OCC
  • Truth in Lending Act: The Truth in Lending Act is a federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on Source: OCC
(b) Every credit sale contract which provides for the extension of closed-end credit primarily for a personal, family, or household purpose shall disclose the following items as applicable:

(1) The amount financed, which is the principal balance less any prepaid finance charge;
(2) A written itemization of the amount financed, or a statement that the buyer has the right to receive a written itemization of the amount financed, together with space for the buyer to indicate whether it is desired;
(3) The finance charge;
(4) The total of payments; and
(5) The total sale price.

Additional items may be included in the contract to explain the calculations involved in determining the stated total of payments to be paid by the buyer.

(c) Every credit sale contract which complies with the disclosure requirements of the federal Truth in Lending Act as of the date upon which the contract is executed shall be deemed to comply with the disclosure provisions of this section.

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