Opinion ID: 2681043
Heading Depth: 2
Heading Rank: 1

Heading: Closed End Credit

Text: As a general rule, “closed end credit” denotes a loan or extension of credit in which the borrower receives the benefit of the proceeds of the loan immediately and repays the principal, together with interest and other charges, in the future, usually in installments.1 Closed end credit is sometimes contrasted to revolving – or “open end” – credit arrangements, like credit cards, in which the borrower is able to use credit to buy goods or secure loans on a continuing basis so long as the outstanding balance does not exceed a specified limit.2 See Maryland Code, Commercial Law Article (“CL”), §12-1001(d) (defining “closed end credit” as “the extension of credit by a credit grantor to a borrower under an arrangement or agreement which is not a revolving credit plan...”). A major category of closed end credit involves loans to individuals to finance the purchase of motor vehicles.3 In Maryland, when the purchase of a motor vehicle is financed by an installment sale, the lender may elect for the contract to be governed by either of two statutes found in Title 12 of the Commercial Law Article of the Maryland Code: the Credit Grantor Closed End Credit Law, Maryland Code, Commercial Law Article, §12-1001 et seq. (“CLEC”), or the Maryland Retail Installment Sales Act, Maryland Code, Commercial Law Article, §12-601 et seq. (“RISA”). If the lender elects CLEC, it is to do so by written election in the loan 1 See American Bar Association, Guide to Credit and Bankruptcy 16 (2d ed. 2012); BusinessDictionary.com, “Closed End Credit” http://www.BusinessDictionary.com/ definition/closed-end-credit.html (last visited February 16, 2014). 2 See Black’s Law Dictionary (9th ed. 2009) at 424 (“revolving credit”). 3 In 2013, more than $800,000,000,000 in motor vehicle loans was outstanding in the United States. Board of Governors of the Federal Reserve System, Consumer Credit - G.19, Consumer Credit Outstanding (Levels) (billions of dollars) Not seasonally adjusted (Nov. 21, 2013, 1:45 PM), http://www.federalreserve.gov/releases/g19/current/default. htm#fn1a. 2 contract. CL §12-1013.1(a)(2); see also Ford Motor Credit Co. v. Roberson, 420 Md. 649, 658 n.8, 25 A.3d 110 (2011). This case concerns a loan contract governed by CLEC.