(a) Interest may not be paid, deducted, or received in advance. Except for open-end loans made under Alaska Stat. § 06.20.285, interest shall be computed and paid only on unpaid principal balances and may not be compounded; however, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, the principal amount payable under the loan contract may include any unpaid charges on the prior loan that have accrued within 60 days before the making of the loan contract. The maximum interest permitted on loans made under this chapter shall be computed on the basis of the number of days actually elapsed. For the purpose of these computations a month is any period of 30 consecutive days.
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Terms Used In Alaska Statutes 06.20.250
- 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
- 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
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- month: means a calendar month unless otherwise expressed. See Alaska Statutes 01.10.060
- writing: includes printing. See Alaska Statutes 01.10.060
Principal amount of loan – Maximum term
up to $1,000 – 24 and 1/2 months
Over $1,000 to $2,500 – 48 and 1/2 months
Over $2,500 to $5,000 – 60 and 1/2 months
Over $5,000 to $25,000 – as agreed to by the parties
(d) Loan contracts must provide for substantially equal payments, and the payments must be due at least once a month, with the first payment beginning not later than 45 days from the date the loan is made.
(e) If the irregular payment is confirmed in writing by the borrower, and the method of repayment is consistent with the maximum term and annual interest rate provided in this chapter, and if a borrower demonstrates sufficient seasonal or extraordinary income to support repayment of a loan, the loan contract may provide for irregular payments and first payment extensions greater than 45 days from the date the loan is made.
