A BILL TO BE ENTITLED
AN ACT to authorize businesses that finance the sale of motor vehicles under the retail installment sales act to charge a loan fee that is not refundable as part of a rebate on prepayment of the debt.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 25A‑32 reads as rewritten:
"§ 25A‑32.  Rebates on prepayment.
(a)	Notwithstanding any provision in a consumer credit installment sale contract to the contrary, any buyer may satisfy the debt in full at any time before maturity, and in so satisfying such debt, shall receive a rebate, the amount of which shall be computed under the "rule of 78's," as follows:
"The amount of such rebate shall represent as great a proportion of the finance charge (less a prepayment charge of ten percent (10%) of the unpaid balance, not to exceed twenty‑five dollars ($25.00) and, for a consumer credit installment sale contract for a self‑propelled motor vehicle, also less a loan fee not to exceed two hundred dollars ($200.00)) as the sum of the periodical time balances after the date of prepayment in full bears to the sum of all the periodical time balances under the schedule of payments in the original contract." No rebate is required if the amount thereof is less than one dollar ($1.00).
(b)	If the prepayment is made otherwise than on the due date of an installment, it shall be deemed to have been made on the installment due date nearest in time to the actual date of payment.
(c)	If a seller obtains a judgment on a debt arising out of a consumer credit installment sale or the seller repossesses the collateral securing the debt, the seller shall credit the buyer with a rebate as if the payment in full had been made on the date the judgment was obtained or 15 days after the repossession occurred. If the seller obtains a judgment and repossesses the collateral, the seller shall credit the buyer with a rebate as if payment in full had been made on the date of the judgment or 15 days after the repossession, whichever occurs earlier."
SECTION 2.  G.S. 25A‑8(a) reads as rewritten:
"(a)	"Finance charge" means the sum of all charges payable directly or indirectly by the buyer and imposed by the seller as an incident to the extension of credit, including any of the following types of charges that apply:
(1)	Interest, time price differential, service, carrying or other similar charge however denominated.
(2)	Premium or other charges for any guarantee or insurance protecting the seller against the buyer's default or other credit loss.
(3)	Loan fee, whether refundable as part of a rebate under G.S. 25A‑32(a) or not, finder's fee, or similar charge.
(4)	Fee for an appraisal, investigation or credit report."
SECTION 3.  This act becomes effective January 1, 2006, and applies to contracts entered into on or after that date.