Regulatory Alerts2020-01-01
155-2-2-.11 Deferral and Extension Charges Amended: January 1, 2020
The Alabama Department of Financial Institutions amended regulations under the Alabama Consumer Credit Act to define permissible deferral and extension charges for pre-computed consumer credit transactions. The rules specify that deferral charges are calculated using the Rule of 78s and require contract adjustments upon renewal, while extension charges for delayed first payments are capped at the maximum authorized finance charges. Additionally, the regulations restrict prepayment penalties to simple interest transactions of at least $2,000 involving real property or specific exempt trust institutions, prohibiting them in all other scenarios.
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