Alabama Code 5-19-17. Inducing obligation on more than one contract in order to obtain higher finance charge prohibited; consolidation of existing precomputed consumer credit transaction contract and subsequent precomputed consumer credit transaction
(a) No creditor shall induce or permit any person or any husband and wife, jointly or severally, to become obligated directly or contingently, or both, on more than one consumer credit transaction at the same time for the purpose of obtaining a higher finance charge than would otherwise be permitted by Section minimum finance charge; alternate per month computed finance charge” class=”unlinked-ref” datatype=”S” sessionyear=”2020″ statecd=”AL” title=”5″>5-19-3. This subsection shall not apply to the maintenance of two or more separate consumer credit transactions where the consumer credit transactions were created on different dates.
Terms Used In Alabama Code 5-19-17
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
Minimum finance charge: The minimum, or fixed, finance charge that will be imposed during a billing cycle. A minimum finance charge usually applies only when a finance charge is imposed, that is, when you carry over a balance. Source: Federal Reserve
person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
(b) It shall be unlawful for any seller to evade or attempt to evade this section by inducing a buyer to become obligated to another creditor in which the initial creditor has a pecuniary interest or with whom the initial creditor has an arrangement for exchange of customers.(c) Subsection (a) does not obligate a creditor to allow any person to maintain two or more contracts or accounts. Effective June 19, 1996, an existing precomputed consumer credit transaction contract and a subsequent precomputed consumer credit transaction document may be consolidated provided that the consumer cannot be required to consolidate the contracts as a condition for the extension of credit nor can the creditor be required to extend credit; and provided further, that if such contracts are consolidated, the annual percentage rate resulting from the consolidation can be no greater than the annual percentage rate on the prior existing consumer credit transaction contract nor can the consumer be charged any duplicate fees or expenses that originated in the existing consumer credit transaction contract, provided, however, that finance charges and other charges and fees rebated in accordance with applicable law and those charges as permitted by Section real property transactions” class=”unlinked-ref” datatype=”S” sessionyear=”2020″ statecd=”AL” title=”5″>5-19-4(f) and UCC filing fees or nonfiling insurance premiums in lieu thereof are excluded from this provision. Nothing herein restricts a creditor from renewing or refinancing an existing consumer credit transaction contract.
