Texas Finance Code 348.123 – Refinancing of Large Installment
(a) If a scheduled installment of a retail installment contract is more than an amount equal to twice the average of all installments scheduled before that installment, other than the down payment, the retail buyer is entitled to refinance that installment:
(1) when the installment is due;
(2) without an acquisition cost;
(3) in installments that are not greater or more frequent than the average amount and frequency of installments preceding that installment; and
(4) at a rate of time price differential that does not exceed the rate applicable to the original contract.
(b) This section does not apply to:
(1) a lease;
(2) a retail installment transaction for a vehicle that is to be used primarily for a purpose other than personal, family, or household use;
(3) a transaction for which the payment schedule is adjusted to the seasonal or irregular income or scheduled payments or obligations of the buyer;
(4) a transaction of a type that the commissioner determines does not require the protection for the buyer provided by this section; or
(5) a retail installment transaction in which:
(A) the seller is a franchised dealer licensed under Chapter 2301, Occupations Code; and
(B) the buyer is entitled, at the end of the term of the retail installment contract, to choose one of the following:
(i) sell the vehicle back to the holder according to a written agreement:
(a) entered into between the buyer and holder concurrently with or as a part of the transaction; and
(b) under which the buyer will be released from liability or obligation for the final scheduled payment under the contract on compliance with the agreement;
(ii) pay the final scheduled payment under the contract; or
(iii) if the buyer is not in default under the contract, refinance the final scheduled payment with the holder for repayment in not fewer than 24 equal monthly installments or on other terms agreed to by the buyer and holder at the time of refinancing and at a rate of time price differential not to exceed the lesser of:
(a) a rate equal to the maximum rate authorized under this subchapter; or
(b) an annual percentage rate of five percent a year more than the annual percentage rate of the original contract.
Terms Used In Texas Finance Code 348.123
- 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.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- 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.
- Written: includes any representation of words, letters, symbols, or figures. See Texas Government Code 311.005
- Year: means 12 consecutive months. See Texas Government Code 311.005
(c) A retail installment contract under Subsection (b)(5) must disclose that any refinancing may be for any period and payment schedule to which the buyer and holder agree.