Section 18A. (1) No retail installment sale agreement may be modified in any way by the parties or by a holder, nor shall the amount financed or unpaid balance as defined in chapter one hundred and forty D, or any other amount owing under any retail installment sale agreement ever become due and owing under any extension of credit or obligation other than the original retail installment sale agreement, except as provided in sections sixteen, seventeen and eighteen; provided, however, that this section shall not apply to any transactions between the buyer and any person not a party to nor a holder of the retail installment sale agreement.

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Terms Used In Massachusetts General Laws ch. 255D sec. 18A

  • Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
  • 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
  • Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
    • You are late making a payment or commit some other default, triggering an increase to a penalty rate
    • The bank changes the terms of your account and you do not reject the change.
    • The rate expires (if the rate was fixed for only a certain period of time).
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • 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.
  • Revolving credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.) Source: OCC
  • Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.

(2) If any retail installment sale agreement or other extension of credit is in violation of this section any person entitled to enforce such agreement or extension is liable to the buyer or buyers in an amount equal to the sum of twice the amount of the finance charge in connection with said agreement or extension, except that the liability shall not be less than five hundred dollars. For purposes of this paragraph, the finance charge shall be the greater of: (a) the total finance charge provided for in said agreement or extension; (b) the total finance charges billed, collected and sought to be collected under said agreement or extension; or (c) the initial principal amount of credit extended, not the amount of the credit line, under said agreement or extension times the annual percentage rate in effect during the first period on which interest accrues under said agreement or extension.

(3)(a) The provisions of subsections (1) and (2) shall not apply to a fixed rate closed-end extension of credit or fixed rate closed-end obligation if the buyer has been furnished a statement in the following form, as a separate document, accurately completed by the creditor, and has freely signed said statement.

NOTICE TO BUYER

STATE LAW PROVIDES THAT YOU DO NOT HAVE TO CONSOLIDATE YOUR RETAIL INSTALLMENT SALE AGREEMENT WITH THE LOAN WHICH YOU ARE NOW APPLYING FOR.

If you do agree to consolidate your retail installment sale agreement, your combined new loan will cost $ ___ more/less in finance charges.

SECURITY INTEREST: IF WE TAKE A MORTGAGE IN YOUR HOME, YOU COULD LOSE YOUR HOME IF YOU DO NOT MEET YOUR LOAN PAYMENTS OR OTHER OBLIGATIONS IN YOUR AGREEMENT WITH US.

I/We have read and understand the above statements and I/we want to have my/our retail installment sale agreement consolidated with the loan which I/we are now applying for.

___ Buyer___ Buyer___ Date

(b) The provisions of subsection (1) and (2) shall not apply to an open-end or variable rate closed-end extension of credit, or to an open-end or variable rate closed-end obligation if the buyer has been furnished a statement in the following form, as a separate document, accurately completed by the creditor, and has freely signed said statement.

NOTICE TO BUYER

STATE LAW PROVIDES THAT YOU DO NOT HAVE TO CONSOLIDATE YOUR RETAIL INSTALLMENT SALE AGREEMENT WITH THE LOAN OR REVOLVING CREDIT AGREEMENT WHICH YOU ARE NOW APPLYING FOR.

You now owe a pay off balance of $ ___ on your retail installment sale agreement as of the date of this agreement. You are now paying a finance charge of $ ___ per month on each $100 outstanding at an ANNUAL PERCENTAGE RATE OF ___% on your retail installment sale agreement.

If you do agree to consolidate your retail installment sale agreement, you will be paying a finance charge of $ ___ per month on each $100 outstanding at an initial ANNUAL PERCENTAGE RATE OF ___% on your combined loan or revolving credit agreement.

This amount may increase or decrease based upon the index used to determine the initial Annual Percentage Rate, which is disclosed in the accompanying disclosure statement. You should also know that it may take you longer to pay off your combined new loan or revolving credit agreement than it would to pay off your retail installment sale agreement.

SECURITY INTEREST: IF WE TAKE A MORTGAGE IN YOUR HOME, YOU COULD LOSE YOUR HOME IF YOU DO NOT MEET YOUR LOAN PAYMENTS OR OTHER OBLIGATIONS IN YOUR AGREEMENT WITH US.

I/We have read and understand the above statements and I/we want to have my/our retail installment sale agreement consolidated with the loan or revolving credit agreement which I/we are now applying for.

___ Buyer___ Buyer___ Date

(4) The commissioner may prescribe the method of computation for all disclosure statements required by subsection (3).

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