Louisiana Revised Statutes 9:3527 – Maximum delinquency charges; notice of conversion
Terms Used In Louisiana Revised Statutes 9:3527
- Consumer: means a natural person who purchases goods, services, or movable or immovable property or rights therein, for a personal, family, or household purpose and includes a purchaser or buyer in a consumer credit sale or transaction made with the use of a seller credit card or otherwise, or a borrower or debtor in a consumer loan, revolving loan account, or a lender credit card. See Louisiana Revised Statutes 9:3516
- Consumer credit transaction: means a consumer loan or a consumer credit sale but does not include a motor vehicle credit transaction made pursuant to La. See Louisiana Revised Statutes 9:3516
- Consumer loan: means a loan of money or its equivalent made by a supervised financial organization, a licensed lender, or lender in which the debtor is a consumer, and the loan is entered into primarily for personal, family, or household purposes and includes debts created by the use of a lender credit card, revolving loan account, or similar arrangement, as well as insurance premium financing. See Louisiana Revised Statutes 9:3516
- Contract: A legal written agreement that becomes binding when signed.
- Credit service charge: means the sum of the following:
(i) All charges payable directly or indirectly by the consumer and imposed directly or indirectly by the seller as an incident to the extension of credit, including any of the following types of charges that are applicable: time price differential; service; carrying or other charge, however denominated; premium or other charge for any guarantee or insurance protecting the seller against the consumer's default or other credit loss; and
(ii) Charges paid by the consumer for investigating the collateral or credit worthiness of the consumer or for commissions or brokerage for obtaining the credit, irrespective of the person to whom the charges are paid or payable, unless the seller had no notice of the charges when the credit was granted. See Louisiana Revised Statutes 9:3516
- creditor: as used in this Chapter includes a seller in a consumer credit sale, revolving charge account, or transaction made with the use of a seller credit card or otherwise, or a lender in a consumer loan, a revolving loan account, or a lender credit card transaction. See Louisiana Revised Statutes 9:3516
- 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
- Grace period: The number of days you'll have to pay your bill for purchases in full without triggering a finance charge. Source: Federal Reserve
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- lender credit card: includes a travel and entertainment credit card account that is not subject to loan finance charges or credit service charges. See Louisiana Revised Statutes 9:3516
- Loan finance charge: means the sum of the following:
(i) All charges payable directly or indirectly by the consumer and imposed directly or indirectly by the lender as a requirement of the extension of credit, including any of the following types of charges that are applicable: interest or any amount payable under a point, discount, or other system of charges, however denominated; and
(ii) Charges paid by the consumer for investigating the collateral or credit worthiness of the consumer. See Louisiana Revised Statutes 9:3516
- Precomputed consumer credit transaction: means a consumer credit transaction under which loan finance charges or credit service charges are computed in advance over the entire scheduled term of the transaction and capitalized into the face amount of the debtor's promissory note or other evidence of indebtedness. See Louisiana Revised Statutes 9:3516
- Revolving loan account: means an arrangement between a lender and a consumer pursuant to which:
(i) The creditor may permit the consumer to obtain consumer loan advances on a preauthorized basis;
(ii) The creditor reasonably contemplates repeated transactions;
(iii) The creditor may impose a loan finance charge from time to time on the outstanding unpaid balance of the consumer's account; and
(iv) The amount of credit that may be extended to the consumer under the account, up to any limit set by the creditor, is generally made available to the extent that any unpaid balance is repaid. See Louisiana Revised Statutes 9:3516
- Simple interest transaction: means a consumer credit transaction under which loan finance charges or credit service charges are assessed by application of a contractual simple interest rate or rates to the unpaid balance of the debtor's promissory note, account or other evidence of indebtedness. See Louisiana Revised Statutes 9:3516
A. The parties to a consumer credit transaction may contract for the payment of a delinquency charge on any installment or other regular payment not paid in full within ten days after its scheduled or deferred due date in either one of the following amounts:
(1) Five percent of the unpaid amount of the delinquent installment, or ten dollars, whichever is greater.
(2) The deferral charge that would be permitted to defer the unpaid amount of the installment or other regular payment for the period that it is delinquent.
B. The parties to a revolving loan account or lender credit card account may contract for the payment of a delinquency charge not to exceed fifteen dollars on any regularly scheduled payment not paid in full within ten days of the payment due date.
C.(1) A delinquency charge may be collected only once on an installment or other payment however long it remains delinquent. No such delinquency charge may be collected if the installment or other payment has been deferred and a deferral charge has been paid or incurred, provided that the deferred payment is paid within ten days of its deferred date. Such a delinquency charge may be collected at the time it accrues or at any time thereafter.
(2) No such delinquency charge may be collected on an installment or other regular payment that is paid in full within ten days after its scheduled due date even though an earlier maturing installment, other payment, or delinquency charge on an earlier installment or other payment may not have been paid in full. For purposes of determining delinquency, payments are deemed to be applied first to current installments or other payments due and then to delinquent installments or other payments and then to delinquent and other charges.
(3) An extender of credit is prohibited from levying or collecting any delinquency charge on a payment when the only delinquency is attributable to late fees or delinquency charges assessed on earlier installments, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within an applicable grace period.
(4) Nothing in this Subsection shall be construed to prohibit the extender of credit from assessing and collecting a finance charge on any delinquency or deferral charges not paid when due. Such finance charges shall not exceed the contract rate charged on the consumer transaction.
D. If two installments or other regular payments or parts thereof of a precomputed consumer credit transaction are in default for ten days or more, the extender of credit may, upon first giving the consumer written notice, elect to convert the precomputed consumer credit transaction into a simple interest transaction. The notice must state the exact date on which the conversion will occur, the interest rate to be charged under the simple interest transaction, the balance due on the loan at the time of the conversion, and whether or not there will be a balloon payment. In this event he shall make a rebate pursuant to the provisions on rebate upon prepayment as of the maturity date of a delinquent installment or other regular payment, and thereafter may make a loan finance charge or credit service charge as authorized by this Part. The amount of the rebate shall not be reduced by the amount of any minimum loan finance charge or minimum credit service charge as provided in La. Rev. Stat. 9:3519(E) and 3520(B); however, the extender of credit may deduct a prepayment charge as provided in La. Rev. Stat. 9:3532.
E. A creditor may contractually reserve the right to prospectively increase the simple interest rate under a consumer loan transaction upon or at any time following the borrower’s default. However, such a default interest rate shall not exceed the loan finance charge rate or rates authorized under La. Rev. Stat. 9:3519(A).
Added by Acts 1972, No. 454, §1, eff. Jan. 1, 1973. Amended by Acts 1980, No. 694, §1; Acts 1982, No. 370, §1; Acts 1986, No. 584, §1, eff. July 2, 1986; Acts 1988, No. 629, §1; Acts 1993, No. 726, §1; Acts 1995, No. 1184, §2; Acts 1997, No. 227, §1; Acts 1997, No. 1033, §1; Acts 2003, No. 337, §2; Acts 2004, No. 763, §1, eff. July 6, 2004.