(1) With respect to a precomputed consumer loan, the parties to a loan may contract for a delinquency charge on any instalment not paid in full within 10 days after its scheduled due date in an amount not to exceed the greater of:

(a) Two Dollars ($2.00) or an amount, not exceeding Five Dollars ($5.00), which is 5% of the unpaid amount of the installment; or

(b) the deferral charge that would be permitted under § 3204(1) to defer the unpaid amount of the instalment for the period that it is delinquent.

(2) A delinquency charge under subsection (a)(1) may be collected only once on an installment however long it remains in default. No delinquency charge may be collected if the installment has been deferred and a deferral charge has been paid in accordance with § 3204. A delinquency charge may be collected at the time it is assessed or at any time thereafter.

(3) No delinquency charge may be collected on an installment which is paid in full within 10 days after a scheduled installment due date even though an earlier maturing installment or a delinquency charge on it may not have been paid in full.

(4) If two installments or parts thereof of a precomputed loan are in default for 10 days, or more, the lender may elect to convert the loan from a precomputed loan to one in which the loan finance charge is based on unpaid balances. In this event he shall make a rebate pursuant to the provisions on rebate upon prepayment (§ 3210) as of the maturity date of the first delinquent installment, and thereafter may make a loan finance charge as authorized by the provisions on loan finance charge for consumer loans (§ 3201) or the provisions on loan finance charge for regulated loans governing non-precomputed loans (§ 3508(3)), whichever is appropriate. The amount of the rebate shall not be reduced by the amount of the minimum retained charge pursuant to § 3210(1). If the lender proceeds under this subsection, any delinquency or deferral charges made with respect to installments due at or after the maturity

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CH. 3 LOANS

date of the first delinquent installment shall be rebated, and no further delinquency or deferral charges shall be made. The amounts of $2.00 and
$5.00 in subsection (1) are subject to change pursuant to the provisions
on adjustment of dollar amounts (§ 1106).