Michigan Laws 492.121 – Installment sale contract; prepayment of unpaid time balance; rebate of unearned finance charge
Current as of: 2023 | Check for updates
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(1) The buyer, notwithstanding the provisions of any installment sale contract, may prepay at any time all or a part of the unpaid time balance under an installment sale contract.
(2) Except as provided in section 41, when all of the time balance is liquidated before maturity by prepayment, refinancing, or termination by surrender or repossession and resale of the motor vehicle, the holder of the installment sale contract shall rebate to the buyer immediately the unearned portion of the finance charge. Rebate may be made in cash or credited to the amount due on the obligation of the buyer.
Terms Used In Michigan Laws 492.121
- buyer: means a person that buys, hires, or leases a motor vehicle for personal, family, or household use, and not for commercial, business, or agricultural use, under an installment sale contract or a legal successor in interest to that person. See Michigan Laws 492.102
- contract: means an agreement for the retail sale of a motor vehicle, or that has a similar purpose or effect, under which part or all of the price is payable in 2 or more scheduled payments subsequent to the making of the agreement or under which the obligor undertakes to make 2 or more scheduled payments or deposits that can be used to pay part or all of the purchase price, whether or not the seller has retained a security interest in the motor vehicle or has taken collateral security for the buyer's obligation, and any extension, deferment, renewal, or other revision of that agreement. See Michigan Laws 492.102
- 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
- Finance charge: means that term as defined in section 106 of the truth in lending act, 15 USC 1605. See Michigan Laws 492.102
- Holder: means a seller or other person that is currently entitled to the rights of a seller under an installment sale contract. See Michigan Laws 492.102
- 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
- Motor vehicle: means a self-propelled device by which a person or property may be transported upon a public highway or, subject to subparagraph (iv), a recreational vehicle. See Michigan Laws 492.102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Time balance: means the sum of the principal amount financed and the finance charge. See Michigan Laws 492.102
(3) The unearned portion of the finance charge to be rebated to the buyer shall be rebated by the actuarial method. The holder is not required to rebate a portion of the unearned finance charge that results in a net minimum finance charge on the contract less than $15.00. The holder is not required to rebate an unearned finance charge when the amount due, computed as set forth in this section, is less than $1.00.