§5-19-3. Maximum finance charges; contracting for minimum finance charge; alternate per month computed finance charge.

(a) Except under open-end credit plans, the maximum finance charge for any credit transaction where the original amount financed is less than two thousand dollars ($2,000), may equal but may not exceed the total of the following:

(1) Fifteen dollars ($15) per one hundred dollars ($100) per year for the first seven hundred fifty dollars ($750) of the original amount financed; and

(2) Ten dollars ($10) per one hundred dollars ($100) per year for that portion of the original amount financed exceeding seven hundred fifty dollars ($750) and less than two thousand dollars ($2,000).

The maximum finance charge under this subsection shall be determined by computing the maximum rates authorized by this subsection on the original amount financed for the full term of the contract without regard to scheduled payments and the maximum finance charge so determined, or any lesser amount, may be added to the original amount financed. The finance charge may be calculated and expressed as a simple interest charge or by any method which does not result in a finance charge yield greater than the yield permitted by this subsection.

(b) A creditor, in connection with any credit sale other than a sale made under an open-end credit plan, may contract for and receive a minimum finance charge not in excess of the following amounts:

(1) Four dollars ($4) on any credit sale in which the amount financed is twenty-five dollars ($25) or less; and

(2) Six dollars ($6) on any credit sale in which the amount financed is more than twenty-five dollars ($25).

(c) In an open-end credit plan, if there is an unpaid balance on the date as of which the finance charge is applied, a creditor may contract for and receive a minimum finance charge in an amount not exceeding fifty cents ($.50) per month.

(d) Other than under an open-end credit plan, in any credit transaction where the finance charge is computed on the unpaid balance of the amount financed outstanding from time to time, for the actual time outstanding:

(1) Each payment shall be applied first to accrued charges and the remainder of the payment applied to the unpaid balance of the amount financed, except that if the amount of the payment is insufficient to pay the accumulated charges, unpaid charges continue to accumulate to be paid from the proceeds of subsequent payments and are not added to the unpaid amount financed.

(2) Except for permissible prepaid finance charges, the finance charge shall not be payable in advance, or compounded; however, if part or all of the consideration for a new credit transaction contract is the unpaid amount financed and unpaid accrued charges of a prior credit transaction, then the amount financed under the new credit transaction contract may include any unpaid accrued charges. The resulting credit transaction contract shall be deemed a new and separate credit transaction for all purposes.

(3) Debtors may pay in advance the unpaid balance of the amount financed and all accrued finance charges without penalty.

(4) For purposes of computing finance charges for a fraction of a month, a day may be considered one-thirtieth of a month, at the option of the creditor.

(e) The provisions of this section shall not apply to any credit transaction with an original amount financed that is equal to or greater than two thousand dollars ($2,000). The finance charge for any credit transaction with an original amount financed or original principal balance not less than two thousand dollars ($2,000) and for any open-end credit plan with a credit limit not less than two thousand dollars ($2,000) shall be subject to the provisions of Section 8-8-5, or Sections 5-20-2, et seq., as applicable. The maximum finance charge for any open-end credit plan with a credit limit of less than two thousand dollars ($2,000) shall be determined by Section 8-8-14, or Sections 5-20-2, et seq., as applicable.

(Acts 1971, No. 2052, p. 3290, §2; Acts 1979, No. 79-328, p. 499, §1; Acts 1996, No. 96-576, p. 887, §2.)