South Carolina General Assembly
110th Session, 1993-1994

Bill 120


Indicates Matter Stricken
Indicates New Matter


                    Current Status

Introducing Body:               Senate
Bill Number:                    120
Primary Sponsor:                Ford
Committee Number:               02
Type of Legislation:            GB
Subject:                        Consumer credit sales and
                                loans
Residing Body:                  Senate
Current Committee:              Banking and Insurance
Computer Document Number:       S.120
Introduced Date:                19930112    
Last History Body:              Senate
Last History Date:              19930112    
Last History Type:              Introduced, read first time,
                                referred to Committee
Scope of Legislation:           Statewide
All Sponsors:                   Ford
Type of Legislation:            General Bill



History


Bill  Body    Date          Action Description              CMN  Leg Involved
____  ______  ____________  ______________________________  ___  ____________

120   Senate  19930112      Introduced, read first time,    02
                            referred to Committee

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(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND SECTIONS 37-2-201 AND 37-3-201, CODE OF LAWS OF SOUTH CAROLINA, 1976, SO AS TO LIMIT THE CREDIT SERVICE CHARGED FOR CONSUMER CREDIT SALES AND THE LOAN FINANCE CHARGE FOR CONSUMER LOANS OTHER THAN SUPERVISED LOANS TO TWENTY-FOUR (24%) PERCENT.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Section 37-2-201 of the 1976 Code is amended to read:

"(1) With respect to a consumer credit sale, including a sale pursuant to a revolving charge account, a seller may contract for and receive a credit service charge not exceeding that permitted by this Section section.

(2) The credit service charge, calculated according to the actuarial method, may not exceed the greater of either of the following: (a) any rate filed and posted pursuant to Section 37-2-305, or (b) eighteen (18%) percent per year on the unpaid balances of the amount financed. (a) eighteen (18%) percent per year on the unpaid balances of the amount financed, or (b) any rate filed and posted pursuant to Section 37-2-305, but in no event to exceed twenty-four (24%) percent.

(3) This section does not limit or restrict the manner of contracting for the credit service charge, whether by way of add-on, discount, or otherwise, so long as the rate of the credit service charge does not exceed that permitted by this section. If the sale is precomputed, (a) The the credit service charge may be calculated on the assumption that all scheduled payments will be made when due, and (b) The the effect of prepayment is governed by the provisions on rebate upon prepayment (Section 37-2-210).

(4) For the purposes of this section, the term of a sale agreement commences with the date the credit is granted or, if goods are delivered or services performed ten days or more after that date, with the date of commencement of delivery or performance. Differences in the lengths of months are disregarded and a day may be counted as one thirtieth of a month. Subject to classifications and differentiations the seller may reasonably establish, a part of a month in excess of fifteen days may be treated as a full month if periods of fifteen days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.

(5) Subject to classifications and differentiations the seller may reasonably establish, he may make the same credit service charge on all amounts financed within a specified range. A credit service charge so made does not violate subsection (2) if (a) When when applied to the median amount with each range, it does not exceed the maximum permitted by subsection (2), and (b) When when applied to the lowest amount within each range, it does not produce a rate of credit service charge exceeding the rate calculated according to paragraph (a) by more than eight percent of the rate calculated according to paragraph (a).

(6) Notwithstanding subsection (2), the seller may contract for and receive a minimum credit service charge of not more than five dollars when the amount financed does not exceed seventy-five dollars, or seven dollars and fifty cents when the amount financed exceeds seventy-five dollars.

(7) Notwithstanding subsection (2), if a seller can demonstrate with competent evidence that (a) any failure to post rates properly filed under Section 37-2-305 was a result of a bona fide error or excusable neglect, (b) the rates were properly posted when the error or neglect was discovered or brought to the seller's attention, and (c) that no other failure to post rates has been brought to the seller's attention by the Department of Consumer Affairs or by consumers within the previous forty-eight month period, then the maximum rate of credit service charges assessable by the seller is the rate properly filed with the Department of Consumer Affairs, provided, however, the seller that has failed or neglected to post rates is subject to a civil penalty of up to $5,000.00 payable to the Department of Consumer Affairs."

SECTION 2. Section 37-3-201 of the 1976 Code is amended to read:

"(1) With respect to a consumer loan, including a loan pursuant to open-end credit, a lender who is not a supervised lender may contract for and receive a finance charge, calculated according to the actuarial method, not exceeding eighteen percent per year. With respect to a consumer loan made pursuant to open-end credit, the finance charge shall be deemed not to exceed eighteen percent per year if the finance charge contracted for and received does not exceed a charge for each monthly billing cycle which is one and one-half percent of the average daily balance of the open-end account in the billing cycle for which the charge is made. The average daily balance of the open-end account is the sum of the amount unpaid each day during that cycle divided by the number of days in the cycle. The amount unpaid on a day is determined by adding to any balance unpaid as of the beginning of that day all purchases, loans, and other debits and deducting all payments and other credits made or received as of that day. If the billing cycle is not monthly, the finance charge shall be deemed not to exceed eighteen percent per year if the finance charge contracted for and received does not exceed a percentage which bears the same relation to one and one-half percent as the number of days in the billing cycle bears to three hundred sixty-five divided by twelve. A billing cycle is monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from the regular date.

(2) With respect to a consumer loan, including a loan pursuant to open-end credit, a supervised lender may contract for and receive a loan finance charge, calculated according to the actuarial method, not exceeding the greater of either of the following: (a) any rate filed and posted pursuant to Section 37-3-305; or (b) eighteen percent per year on the unpaid balances of principal. (a) eighteen percent per year on the unpaid balances of principal, or (b) any rate filed and posted pursuant to Section 37-3-305, but in no event to exceed twenty-four (24%) percent.

(3) This section does not limit or restrict the manner of calculating the finance charge, whether by way of add-on, discount, single annual percentage rate, or otherwise, so long as the rate of the finance charge does not exceed that permitted by this section.

If the loan is a precomputed consumer credit transaction: (a) the finance charge may be calculated on the assumption that all scheduled payments will be made when due; and (b) the effect of prepayment is governed by the provisions on rebate upon prepayment (Section 37-3-210).

(4) Except as provided in subsection (5), the term of a loan for purposes of this section commences on the day the loan is made. Any month may be counted as one-twelfth of a year but a day is counted as one-three hundred sixty-fifths of a year. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen days may be treated as a full month if periods of fifteen days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.

The administrator may adopt regulations not inconsistent with the Federal Truth in Lending Act with respect to treating as regular other minor irregularities in amount or time.

(5) Subject to classifications and differentiations the lender may reasonably establish, he may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate subsection (1) or (2) if: (a) when applied to the median amount within each range, it does not exceed the maximum permitted by the applicable subsection, (b) when applied to the lowest amount within each range, it does not produce a rate of finance charge exceeding the rate calculated according to item (a) by more than eight percent of the rate calculated according to item (a).

(6) Notwithstanding subsection (2), if a lender can demonstrate with competent evidence that (a) any failure to post rates properly filed under Section 37-3-305 or failure to properly file these rates under Section 37-3-305 was a result of a bona fide error or excusable neglect, (b) the rates were properly posted or properly filed when the error or neglect was discovered or brought to the lender's attention, and (c) that no other failure to post or file rates has been brought to the lender's attention by the Department of Consumer Affairs or by consumers within the previous forty-eight month period, then the maximum rate of loan finance charges assessable by the lender is the rate previously properly filed with the Department of Consumer Affairs, provided, however, the lender that has failed or neglected to post rates or to file rates is subject to a civil penalty of up to $5,000.00 payable to the Department of Consumer Affairs."

SECTION 3. This act takes effect upon approval by the Governor.

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