California Code of Regulations › Title 10 - Investment › Chapter 3 - Commissioner of Financial Protection and Innovation › Subchapter 3 - Commercial Financing Disclosures › Section 911 - Commercial Open-End Credit Plan Disclosure Formatting and Contents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Disclosures for
				commercial open-end credit plans provided in accordance with section
				22802 of the code, except open-end
				credit plans described in section
				900, subdivision (a)(5)(C), shall
				comply with the following requirements.
(1)
				The provider shall present the disclosures in a table consisting of ten rows
				and three columns.
(2) In the first
				row, the first, second and third columns shall be combined, and the resulting
				cell shall have only the following language, in italics:
(A) If the contract allows only for a single
				payment option: "The calculations below are based on an initial draw of your
				full Approved Credit Limit of [approved credit limit] and assume that you will
				pay off the draw entirely according to the agreed payment schedule, that you
				miss no payments, and that you do not redraw on this line. Actual costs may
				differ substantially."
(B) If the
				contract allows for multiple payment options: "The calculations below are based
				on an initial draw of your full Approved Credit Limit of [approved credit
				limit] and assume that you will choose to make minimum payments, that you miss
				no payments, and that you do not re-draw on this line. Actual costs may differ
				substantially."
(C) If the amount
				borrowed is payable on demand, the provider shall include a short explanation
				that amounts borrowed are payable on demand and that the estimate assumes a
				term of one year.
(D) If an
				alternate maturity date is stated in the legal obligation between the parties,
				then the provider shall include a short explanation that the disclosure is
				based upon that maturity date.
(3) The second 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,
				in the order listed and in one paragraph:
(i)
				"This is the maximum amount of funding [name of financer] may
				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 if you request
				the maximum amount 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.
(4) The third row of the table shall include
				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: "Annual
				Percentage Rate (APR)".
(ii) If the
				contract provides for an adjustable interest rate and it is not possible to
				calculate the interest rates throughout the term of the transaction in advance:
				"Initial Annual Percentage Rate (APR)".
(B) In the second column, the provider's
				calculation of the annual percentage rate calculated in accordance with section
				940.
(C) In the third column:
(i) 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.
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) If the contract provides for 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) If the
				contract provides for an adjustable interest rate and it is not possible to
				calculate the interest rates throughout the term of the transaction in advance:
"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) 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.
APR is not an interest rate. The cost of this financing is
				  based upon fees charged rather than interest that accrues over
				  time."
(5) The fourth row of the table shall include
				only the following information:
(A) In the
				first column: "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 our financing
				based upon the assumptions described at the top of this disclosure."
(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."
(6) The fifth row of the table shall include
				only the following information:
(A) In the
				first column: "Estimated Total Payments".
(B) In the second column, the total estimated
				payments the recipient will make during the term of the contract if the
				recipient makes minimum required payments.
(C) In the third column: "This is the total
				dollar amount of payments you will make during the term of the contract based
				upon the assumptions described at the top of this
				disclosure."
(7) The
				sixth row of the table shall include only the following information:
(A) In the first column: "Estimated
				Payment".
(B) If periodic payments
				during the term of the transaction will not vary over the term of the
				transaction:
(i) In the second column, the
				amount of the periodic payment followed by a forward slash (/) and the
				frequency of each periodic payment followed by the date and amount of any
				irregular payments listed in chronological order.
(ii) In the third column, a short explanation
				of when each 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 fifth row shall be combined and
				the provider shall list the periodic payment and when each amount will become
				due followed by the date and amount of any irregular payments listed
				chronological order and any assumptions made when calculating the payment
				amounts. 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.
(D) If periodic payments during the term of
				the transaction vary and it is not possible to calculate all payment amounts in
				advance because the transaction has an adjustable interest rate that cannot be
				calculated in advance:
(i) In the second
				column, a periodic payment amount calculated using the initial interest rate
				followed by the date and amount of any reasonably anticipated irregular
				payments listed in chronological order.
(ii) In the third column, a short explanation
				that the periodic payment amount disclosed is based upon the initial interest
				rate, and that the actual rate may change over time. The provider may also
				include a short explanation describing when the payment will adjust and how it
				will be calculated.
(E)
				If periodic payments of principal during the term of the transaction do not
				vary but periodic payments of interest during the term of the transaction vary,
				and it is not possible to calculate all interest payment amounts in advance
				because the transaction has an adjustable interest rate that cannot be
				calculated in advance:
(i) In the second
				column, the phrase "Initial Interest Payment:" followed by an interest payment
				amount calculated using the initial interest rate, followed by a forward slash
				(/) and the frequency of each periodic interest payment.
(ii) In the second column, beneath the
				disclosure required by subdivision (a)(7)(E)(i), the phrase "Principal Payment
				Amount:" followed by the amount of each periodic principal payment, followed by
				a forward slash (/) and the frequency of each periodic principal
				payment.
(iii) In the third column,
				a short explanation that the Initial Interest Payment Amount disclosed is based
				upon the initial interest rate, and that the actual rate may change over
				time.
(iv) In the third column,
				beneath the statement explaining the Initial Interest Payment Amount and at the
				same height as the disclosure required under subdivision (a)(7)(E)(ii), a short
				explanation of the principal payment amount and
				frequency.
(8)
				The seventh row of the table shall include only the following information:
(A) In the first column: "Draw
				Period".
(B) In the second column,
				the draw period for the transaction.
(C) In the third column, a short explanation
				of the draw period for the transaction.
(9) The eighth 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.
(10) In the first column, the ninth and tenth
				rows shall be combined and shall include only the following language:
				"Prepayment".
(11) In the ninth
				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 finance charges other than interest accrued since the
				recipient's last payment, the following statement: "If you pay off the
				financing early you will need pay all or 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)."
(12) In the tenth 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 the additional fees and charges.
(B) In all other cases, the following
				statement: "If you pay off the financing early you will not pay additional
				fees."
(13) If the
				contract provides for periodic payments that are not monthly, the provider
				shall insert one additional row below the fifth 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."