Texas Finance Code 347.110 – Use of Optional Ceiling
(a) This section applies to a credit transaction only if the federal usury preemptions for residential mortgage loans contained in the Veterans’ Disability Compensation and Survivors’ Benefits Act of 1979 (38 U.S.C. § 101 et seq.), the Housing and Community Development Act of 1979 (42 U.S.C. § 5401 et seq.), and the Depository Institutions Deregulation and Monetary Control Act of 1980 (12 U.S.C. § 1735f-7) are expressly made inapplicable to transactions made in this state by an Act of the legislature of this state. Application of this section begins on the effective date of that Act.
(b) The interest or time price differential in a credit transaction may not exceed the amount obtained by applying a simple interest rate equal to 13.32 percent a year to the unpaid balance for the scheduled term of the transaction.
Terms Used In Texas Finance Code 347.110
- Credit document: means a written instrument evidencing a credit transaction and includes all written agreements between each consumer and creditor that relate to that transaction. See Texas Finance Code 347.002
- Credit transaction: means :
(A) any sale, loan, or other transaction involving a retail purchase of a manufactured home and under which a person in a written agreement, including a credit sales contract or loan instrument, grants to another person a purchase money lien on the manufactured home to secure an extension of credit that is:
(i) subject to a finance charge; or
(ii) payable in more than four installments, not including a down payment; and
(B) a lease or bailment described by § 347. See Texas Finance Code 347.002 - 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. See Texas Government Code 312.011
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Usury: Charging an illegally high interest rate on a loan. Source: OCC
- Year: means 12 consecutive months. See Texas Government Code 311.005
(c) If the credit transaction is payable for a period that is shorter or longer than a year or is for an amount that is less or greater than $100, the amount of the maximum charge computed under this section is decreased or increased proportionately.
(d) For the purpose of a computation under this section, 15 or more days of a month may be considered a full month.
(e) A transaction payable other than in substantially equal successive monthly installments beginning one month from the date of the credit document may provide for a finance charge that does not exceed an amount that, having due regard for the schedule of payments, provides the same effective return as if the credit transaction were payable in substantially equal successive monthly installments beginning one month from the date of the credit document.
(f) As an alternative to the rate authorized under Subsection (b), a credit transaction may provide for a rate that does not exceed the applicable optional interest rate ceiling under Chapter 303.