Arizona Laws 6-632. Finance charges
A. A licensee may contract for and receive finance charges on consumer loans that are not more than the following amounts:
Terms Used In Arizona Laws 6-632
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- 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
- Annual percentage rate: means the measure of the cost of credit, expressed as a yearly rate, that relates the amount and timing of value received by the consumer to the amount and timing of payments made, determined in accordance with the truth in lending act. See Arizona Laws 6-601
- Consumer: means an individual who obtains a consumer lender loan for personal, family or household purposes. See Arizona Laws 6-601
- Consumer loan: means the direct closed end loan of money, whether unsecured or secured by personal or real property, in an amount of $10,000 or less that is subject to a finance charge in which only the principal amount of the loan is considered, and not any finance charges or other fees allowed pursuant to section 6-635, for the purpose of determining whether the consumer loan is $10,000 or less. See Arizona Laws 6-601
- Consumer loan rate: means the periodic rate of finance charges that applies to the outstanding principal balance of a consumer loan and that remains unpaid. See Arizona Laws 6-601
- Consumer revolving loan: means an open end revolving loan that is established pursuant to an agreement with an agreed on credit limit that does not exceed $10,000, that the consumer may pay in full at any time but has the privilege of paying in installments and that contemplates or provides that advances may be obtained from time to time by the consumer, through checks, drafts, items, credit access devices, orders for the payment of money, evidences of debt or similar means, whether or not negotiable. See Arizona Laws 6-601
- Contract: A legal written agreement that becomes binding when signed.
- Home equity revolving loan: means an open end revolving loan that is made pursuant to an agreement with an agreed on credit limit that is not more than $10,000, that is secured by the consumer's principal residence and that provides that advances may be obtained from time to time by the consumer through checks, drafts, items, credit access devices, orders for the payment of money, evidences of debt or similar means, whether or not negotiable. See Arizona Laws 6-601
- Licensee: means a person licensed pursuant to this chapter. See Arizona Laws 6-601
- 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.
1. On a consumer loan in an original principal amount of three thousand dollars or less, a consumer loan rate of thirty-six per cent.
2. On a consumer loan in an original principal amount of more than three thousand dollars, either:
(a) A consumer loan rate of thirty-six per cent on the initial three thousand dollars of the original principal amount, and a consumer loan rate of twenty-four per cent on that part of the principal amount greater than three thousand dollars.
(b) The single blended consumer loan rate that results from the total amount of finance charges that the licensee would receive through the scheduled maturity of the consumer loan at the consumer loan rates that otherwise would be applicable pursuant to subdivision (a) of this paragraph to the different portions of the unpaid principal balance, assuming that the consumer loan will be paid according to its agreed terms.
B. A licensee may contract for and receive periodic finance charges on consumer revolving loans and home equity revolving loans that are not more than the following amounts:
1. On consumer revolving loans with credit limits of three thousand dollars or less, a periodic rate corresponding to an annual percentage rate of thirty-six per cent on the outstanding balance each monthly billing cycle.
2. On consumer revolving loans with credit limits of more than three thousand dollars and home equity revolving loans, either:
(a) A periodic rate corresponding to an annual percentage rate of thirty-six per cent on that portion of the outstanding balance each monthly billing cycle that is not more than three thousand dollars and a periodic rate corresponding to an annual percentage rate of twenty-four per cent on that portion of the outstanding balance each monthly billing cycle that is more than three thousand dollars.
(b) A periodic rate corresponding to the single blended annual percentage rate that would result in a periodic finance charge during a monthly billing cycle that is not more than the finance charges that result from the application of the multiple periodic rates authorized by subdivision (a) of this paragraph.
C. A licensee may charge a fixed or variable rate of periodic finance charges on a consumer revolving loan or a home equity revolving loan, as provided by the agreement that establishes the consumer revolving loan or home equity revolving loan. The licensee shall not base a variable rate of periodic finance charges on an index that is under the control of the licensee. Unless the consumer can readily verify the index on which an adjustment in the rate of periodic finance charges is based, the licensee shall provide conspicuous notice of the rate adjustment at least one monthly billing cycle before the effective date of the rate adjustment. The licensee may include a rate adjustment notice on or with a periodic statement to the consumer. The corresponding annual percentage rate of periodic finance charges may not increase or decrease more than three percentage points in any period of twelve consecutive months, and the corresponding annual percentage rate of periodic finance charges may not increase or decrease more than seven percentage points above or below the initial annual percentage rate of periodic finance charges at the time the consumer revolving loan or home equity revolving loan is established.
D. Except as permitted by subsection E of this section, prepaid finance charges commonly referred to as points are prohibited.
E. In addition to the finance charges authorized in subsections A, B and C of this section, a licensee may contract for and receive, and collect finance charges on, nonrefundable prepaid finance charges or fees commonly referred to as points in an amount of not more than:
1. Four per cent of the original principal amount of a consumer loan of at least five thousand dollars secured by the consumer’s principal residence.
2. Four per cent of the agreed on credit limit of a home equity revolving loan.
F. If a consumer loan, consumer revolving loan or home equity revolving loan is in existence before the effective date of this amendment to this section and is modified or restructured after the effective date of this amendment to this section and the total new cash advances do not exceed one hundred dollars, a licensee may not contract for and receive periodic finance charges at an annual percentage rate that is higher than the annual percentage rate that existed before the effective date of this amendment to this section.