California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 3 - Commercial Financing Disclosures › Section 910 - Closed-End Transaction Disclosure Formatting and Contents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Disclosures for closed-end transactions
				provided in accordance with section
				22802 of the code, and open-end
				credit plans described in section
				900, subdivision (a)(5)(C), shall
				comply with the following requirements unless the closed-end transaction meets
				the definition of sales-based financing.
(1)
				The provider shall present the disclosures in a table consisting of eight rows
				and three columns.
(2) The first
				row of the table shall include only the following information.
(A) In the first column: "Funding
				Provided".
(B) In the second
				column, the amount financed.
(C) In
				the third column, the following in the order listed and in one paragraph:
(i) "This is how much funding [name of
				financer] will provide."
(ii) If
				the amount financed is greater than the recipient funds: "Due to deductions or
				payments to others, the total funds that will be provided to you directly is
				[recipient funds]. For more information on what amounts will be deducted,
				please review the attached document "Itemization of Amount
				Financed.""
(iii) If any portion of
				the amount financed will be used to pay down or pay off other amounts owed by
				the recipient that may change over time, and the amounts owed are known to the
				provider, the provider shall also include a short explanation that the amount
				paid directly to the recipient may change if the amount owed for the
				recipient's other obligations changes.
(iv) If, as a condition of the financing, a
				recipient's amounts owed to third parties must be paid down or paid off using
				funds from the amount financed, and an amount owed is not known to the
				provider, the provider shall also include a short explanation that the amount
				paid directly to the recipient may change based upon the required disbursements
				to satisfy other obligations.
(3) The second row of the table shall include
				only the following information.
(A) In the
				first column:
(i) If the contract provides for
				a fixed interest rate or rates that are predetermined by the contract, or no
				interest rate: "Annual Percentage Rate (APR)".
(ii) If the contract provides for an
				adjustable interest rate or rates that are not predetermined by the contract:
				"Estimated Annual Percentage Rate (APR)".
(B) In the second column, the annual
				percentage rate calculated in accordance with section
				940.
(C) In the third column:
(i) The following language, if the contract
				provides for a single, fixed interest rate:
"APR is the cost of your financing expressed as a yearly
				  rate. APR includes the amount and timing of the funding you receive, interest
				  and fees you pay and the payments you make.
Your APR is not an interest rate. Your interest rate is
				  [interest rate]. Your APR may be higher than your interest rate because APR
				  incorporates interest costs and other finance charges."
(ii) The following language, if the contract
				provides for a multiple pre-determined interest rates that change over time:
"APR is the cost of your financing expressed as a yearly
				  rate. APR includes the amount and timing of the funding you receive, interest
				  and fees you pay and the payments you make.
Your APR is not an interest rate. Your initial interest rate
				  is [initial interest rate]. Your APR may be higher than your interest rate
				  because APR incorporates interest costs and other finance
				  charges."
(iii) The
				following language, if the contract provides for an adjustable interest rate or
				rates that are not predetermined by the contract.
"APR is the cost of your financing expressed as a yearly
				  rate. APR includes the amount and timing of the funding you receive, interest
				  and fees you pay and the payments you make.
APR is not an interest rate. Your initial interest rate is
				  [initial interest rate]. Although your interest rate will adjust over time, for
				  the purposes of calculating this APR estimate, we have used the initial
				  interest rate for future periods where the interest rate is not preset by the
				  contract. Your APR may be higher than your interest rate because APR
				  incorporates interest costs and other finance charges."
(iv) The following language if no part of the
				finance charge is based upon an interest rate:
"APR is the cost of your financing expressed as a yearly
				  rate. APR includes the amount and timing of the funding you receive, fees you
				  pay and the payments you make.
Your APR is not an interest rate. The cost of this financing
				  is based upon fees charged rather than interest that accrues over
				  time."
(4) The third row of the table shall include
				only the following information.
(A) In the
				first column:
(i) If the contract provides
				for a fixed interest rate or rates that are predetermined by the contract, or
				no part of the finance charge is based upon an interest rate: "Finance
				Charge".
(ii) If the contract
				provides for an adjustable interest rate or rates that are not predetermined by
				the contract: "Estimated Finance Charge".
(B) In the second column, the total finance
				charge, calculated in accordance with section
				943.
(C) In the third column:
(i) "This is the dollar cost of your
				financing."
(ii) If the contract
				provides for an adjustable interest rate or rates that are not predetermined by
				the contract: "The interest rate under your contract will adjust over time, so
				your actual finance charge may vary."
(5) The fourth row of the table shall include
				only the following information.
(A) In the
				first column:
(i) If, assuming the recipient
				makes minimum required payments under the contract, it is possible to calculate
				with certainty the total payments the recipient will make during the contract's
				term: "Total Payment Amount".
(ii)
				If, assuming the recipient makes minimum required payments under the contract,
				it is not possible to calculate with certainty the total payments the recipient
				will make during the contract's term: "Estimated Total Payment
				Amount".
(B) In the
				second column, the total dollar amount of payments or total estimated dollar
				amount of payments the recipient will make during the term of the contract if
				the recipient makes minimum required payments.
(C) In the third column:
(i) If, assuming the recipient makes minimum
				required payments under the contract, it is possible to calculate with
				certainty the total dollar amount of payments the recipient will make during
				the term of the contract: "This is the total dollar amount of payments you will
				make during the term of the contract."
(ii) If, assuming the recipient makes minimum
				required payments under the contract, it is not possible to calculate with
				certainty the total dollar amount of payments the recipient will make during
				the term of the contract: "This is our estimate of the total dollar amount of
				payments you will make during the term of the
				contract."
(6)
				The fifth row of the table shall include only the following information:
(A) In the first column:
(i) If the periodic payments will not vary
				over the term of the transaction or the periodic payments during the term of
				the transaction will vary and it is possible to calculate the payment amounts
				in advance: "Payment".
(ii) If the
				periodic payment amounts will vary over the term of the transaction and it is
				not possible to calculate the payment amounts in advance (e.g. due to an
				adjustable interest rate using a benchmark rate and a margin): "Initial
				Payment".
(B) If periodic
				payments during the term of the transaction will not vary:
(i) In the second column, the amount of each
				periodic payment followed by a forward slash (/) and the frequency of each
				periodic payment (e.g., month, day, or other period) followed by the date and
				amount of any irregular payments listed in chronological order.
(ii) In the third column, a short explanation
				of the payment frequency and any irregular payments. The provider may also
				include a short explanation describing when each periodic payment will become
				due.
(C) If periodic
				payments during the term of the transaction vary and it is possible to
				calculate the payment amounts in advance, the second and third columns in the
				fourth row shall be combined and the provider shall list the periodic payment
				amounts and when each amount will become due followed by the date and amount of
				any irregular payments in listed chronological order. For example:
Months 1-12: $600/month
Months 13-24: $1200/month
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
Or
Payments 1-23: $600/month
Payment 24: $2000.
Maintenance Fee Due 2/1/2021: $500.
Maintenance Fee Due 8/1/2022: $300.
(D) If periodic payments during the term of
				the transaction vary and it is not possible to calculate all payment amounts in
				advance:
(i) In the second column, the initial
				periodic payment amount followed by a forward slash (/) and the frequency of
				each periodic payment followed by the date, followed by the date and amount of
				any irregular payments listed in chronological order.
(ii) In the third column: "This is your
				initial periodic payment. Your periodic payment may adjust over
				time."
(7) The
				sixth row of the table shall include no information in the third column, and
				the remaining columns shall include only the following information:
(A) In the first column: "Term".
(B) In the second column, the term of the
				transaction.
(8) In the
				first column, the seventh and eight rows shall be combined and shall include
				only the following language: "Prepayment".
(9) In the seventh row, the second and third
				columns shall be combined and include only:
(A) If, at any time during the term of the
				transaction, prepayment of the outstanding balance due will require the
				recipient to pay charges other than interest accrued since the recipient's last
				payment, the following statement: "If you pay off the financing early, you will
				still need to pay all or a portion of the finance charge, up to $[maximum
				non-interest finance charge]."
(B)
				In all other cases, "If you pay off the financing early, you will not need to
				pay any portion of the finance charge other than unpaid interest accrued (if
				applicable)."
(10) In the
				eighth row, the second and third columns shall be combined and shall include
				only:
(A) If, at any time during the term of
				the transaction, prepayment of the outstanding balance due will require the
				recipient to pay additional fees and charges not included in the finance
				charge, the following statement: "If you pay off the financing early you must
				also pay the following additional fees:" followed by the amounts and
				descriptions of each additional fee and charge.
(B) In all other cases, the following
				statement: "If you pay off the financing early you will not pay additional
				fees."
(11) If the
				contract provides for periodic payments that are not monthly, the provider
				shall insert one additional row below the fourth row, and the additional row
				shall include only the following information:
(A) In the first column: "Average Monthly
				Cost".
(B) In the second column,
				the average monthly cost that the recipient will pay over the term of the
				transaction.
(C) In the third
				column: "Although this financing does not have monthly payments, this is our
				calculation of your average monthly cost for comparison
				purposes."
(12) If the
				contract provides for multiple payment options, then the provider shall insert
				one additional row above the first row, and in that row, all three columns
				shall be combined, resulting in a single cell. In that cell, the provider shall
				include the following: "This financing has multiple payment options. This
				disclosure assumes you will make the minimum payments permitted under the
				contract."