CHAPTER 3 - LOANS - South Carolina Statutes

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CHAPTER 3 - LOANS

Title 37 - Consumer Protection Code

CHAPTER 3.

LOANS

PART 1.

GENERAL PROVISIONS

SECTION 37-3-101. Short title.

This chapter shall be known and may be cited as South Carolina Consumer Protection Code - Loans.

SECTION 37-3-102. Scope.

This chapter applies to consumer loans including supervised loans and, except as provided in Sections 37-3-200 and 37-3-500, restricted loans; in addition part 6 applies to loans other than consumer loans.

SECTION 37-3-103. Index of definitions.

The following definitions apply to this title and appear in this chapter as follows:

"Consumer Loan"--Section 37-3-104

"Lender"--Section 37-3-107(1)

"Loan"--Section 37-3-106

"Loan finance charge"--Section 37-3-109

"Loan primarily secured by an interest in land"--Section 37-3-105

"Precomputed"--Section 37-3-107(2)

"Principal"--Section 37-3-107(3)

"Restricted Lender"--Section 37-3-501(4)

"Restricted Loan"--Section 37-3-501(3)

"Revolving loan account"--Section 37-3-108

"Short-term vehicle secured loan"--Section 37-3-413(1)

"Supervised Lender"--Section 37-3-501(2)

"Supervised Loan"--Section 37-3-501(1)

SECTION 37-3-104. "Consumer loan" defined.

Except as provided in Section 37-3-105, "consumer loan" is a loan made by a person regularly engaged in the business of making loans in which:

(a) the debtor is a person other than an organization;

(b) the debt is incurred primarily for a personal, family, or household purpose;

(d) either the principal does not exceed twenty-five thousand dollars or the debt is secured by an interest in land.

SECTION 37-3-105. First mortgage real estate loans.

[Section effective until January 1, 2010. See, also, section effective January 1, 2010.]

(1) Except as otherwise provided in subsection (2), unless the loan is made subject to this title by agreement (Section 37-3-601), "consumer loan" does not include a loan secured by a first lien or equivalent security interest in real estate.

(2) Loans excluded from the definition of a "consumer loan" pursuant to subsection (1) shall nevertheless be subject to the following provisions:

(a) Civil liability for violation of disclosure (Section 37-5-203);

(b) Voluntary complaint resolution (Section 37-6-117);

(c) Whenever the primary purpose of the credit extended is not to enable the debtor to buy or build a residence on residential real property, the administrative powers in Part 1 of Article 6.

If an origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge substantially exceeds the usual and customary charge for a particular type of loan, the creditor is subject to the provisions of Part 1, Chapter 6 of Title 37, notwithstanding that the origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge is properly disclosed as part of the finance charge for purposes of complying with the Federal Truth-in-Lending Act or part or all of the origination charge, prepaid finance charge, prepaid points charge, service, or other prepaid charges are rebatable or refundable upon prepayment or acceleration of the obligation. For the purpose of this paragraph, a creditor is not subject to any liability if the loan finance charge and other fees and charges imposed by the creditor and the collection practices followed in administering or enforcing the loan are usual and customary for the particular type of loan. A charge, collection practice, or administrative procedure that is authorized or required by any state or federal statute or regulation relating to mortgage loans; or in any official manual setting forth the procedures for real estate mortgages issued by any governmental or quasi-governmental organization that purchases, insures, or guarantees such loans, including without limitation, manuals issued by the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Corporation, or by any organization that regularly insures mortgages and is authorized to conduct such business in this State, is deemed to be usual and customary.

(3) Loans excluded from the definition of a "consumer loan" pursuant to subsection (1) shall also be subject to the provisions of Chapter 10 of this title (Sections 37-10-101 et seq.).

SECTION 37-3-105. First mortgage real estate loans.

(2) Loans excluded from the definition of a "consumer loan" pursuant to subsection (1) shall nevertheless be subject to the following provisions:

(a) Civil liability for violation of disclosure (Section 37-5-203);

(b) Voluntary complaint resolution (Section 37-6-117);

(c) Whenever the primary purpose of the credit extended is not to enable the debtor to buy or build a residence on residential real property, the administrative powers in Part 1 of Article 6.

[Subsection effective until January 1, 2010.]

(3) Loans excluded from the definition of a "consumer loan" pursuant to subsection (1) shall also be subject to the provisions of Chapter 10 of this title (Sections 37-10-101 et seq.).

[Subsection effective January 1, 2010.]

(3) Loans excluded from the definition of a "consumer loan" pursuant to subsection (1) also are subject to the provisions of Chapter 7, Chapter 10, Chapter 22, and Chapter 23 of this title.

SECTION 37-3-106. "Loan" defined.

"Loan" includes:

(1) The creation of debt by the lender's payment of or agreement to pay money to the debtor or to a third party for the account of the debtor;

(2) The creation of debt by a credit to an account with the lender upon which the debtor is entitled to draw immediately;

(3) The creation of debt pursuant to a lender credit card or similar arrangement; and

(4) The forbearance of debt arising from a loan.

SECTION 37-3-107. "Lender"; "precomputed"; "principal" defined.

(1) Except as otherwise provided "lender" includes an assignee of the lender's right to payment but use of the term does not in itself impose on an assignee any obligation of the lender with respect to events occurring before the assignment.

(2) A loan, refinancing, or consolidation is "precomputed" if the debt is expressed as a sum comprising the principal and the amount of the loan finance charge computed in advance.

(3) "Principal" of a loan means the total of:

(a) the net amount paid to, receivable by, or paid or payable for the account of the debtor.

(b) the amount of any discount excluded from the loan finance charge (subsection (2) of Section 37-3-109), and,

(i) amounts actually paid or to be paid by the lender for registration, certificate of title, or license fees if not included in (a), and

(ii) additional charges permitted by this chapter (Section 37-3-202).

SECTION 37-3-108. "Revolving loan account" defined.

"Revolving loan account" means an arrangement between a lender and a debtor pursuant to which (1) the lender may permit the debtor to obtain loans from time to time, (2) the unpaid balances of principal and the loan finance and other appropriate charges are debited to an account, (3) a loan finance charge if made is not precomputed but is computed on the outstanding unpaid balances of the debtor's account from time to time, and (4) the debtor has the privilege of paying the balances in installments.

SECTION 37-3-109. "Loan finance charge" defined.

(1) "Loan finance charge" means the sum of -

(a) all charges payable directly or indirectly by the debtor and imposed directly or indirectly by the lender as an incident to the extension of credit, including any of the following types of charges which are applicable: interest or any amount payable under a point, discount or other system of charges, however denominated, premium or other charge for any guarantee or insurance protecting the lender against the debtor's default or other credit loss; and, except as otherwise provided in this section;

(b) charges incurred for investigating the collateral or creditworthiness of the debtor or for commissions or brokerage for obtaining the credit, irrespective of the person to whom the charges are paid or payable, unless the lender had no notice of the charges when the loan was made but excluding fees and charges paid to persons registered as mortgage loan brokers pursuant to Chapter 58 of Title 40. The term does not include charges as a result of default, additional charges (Section 37-3-202), delinquency charges (Section 37-3-203), or deferral charges (Section 37-3-204), or in a consumer loan which is secured in whole or in part by a first or junior lien on real estate, charges incurred for appraising the real estate that is collateral for the loan, if not paid to the creditor or a person related to the creditor.

(2) If a lender makes a loan to a debtor by purchasing or satisfying obligations of the debtor pursuant to a lender credit card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount is not part of the loan finance charge.

PART 2.

MAXIMUM CHARGES

SECTION 37-3-200. Restricted loans and restricted lenders.

This part does not apply to restricted loans or restricted lenders.

SECTION 37-3-201. Loan finance charge for consumer loans.

(1) With respect to a consumer loan, including a loan pursuant to open-end credit, a lender who is not a supervised lender may contract for and receive a finance charge, calculated according to the actuarial method, not exceeding twelve percent per year. With respect to a consumer loan made pursuant to open-end credit, the finance charge shall be deemed not to exceed twelve percent per year if the finance charge contracted for and received does not exceed a charge for each monthly billing cycle which is one percent of the average daily balance of the open-end account in the billing cycle for which the charge is made. The average daily balance of the open-end account is the sum of the amount unpaid each day during that cycle divided by the number of days in the cycle. The amount unpaid on a day is determined by adding to any balance unpaid as of the beginning of that day all purchases, loans, and other debits and deducting all payments and other credits made or received as of that day. If the billing cycle is not monthly, the finance charge shall be deemed not to exceed twelve percent per year if the finance charge contracted for and received does not exceed a percentage which bears the same relation to one percent as the number of days in the billing cycle bears to three hundred sixty-five divided by twelve. A billing cycle is monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from the regular date.

(2) With respect to a consumer loan, including a loan pursuant to open-end credit, a supervised lender may contract for and receive a loan finance charge as provided:

(a) on loans with a cash advance not exceeding six hundred dollars, a maximum charge not exceeding the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate, provided that a supervised lender may impose a finance charge at a rate less than provided in Section 34-29-140, and provided further that the maximum charge shall not exceed the rate posted and filed pursuant to Section 37-3-305;

(b) on loans with a cash advance exceeding six hundred dollars, and on all loans, regardless of the dollar amount, made by Supervised Financial Organizations, any rate filed and posted pursuant to Section 37-3-305; or

(3) This section does not limit or restrict the manner of calculating the finance charge, whether by way of add-on, discount, single annual percentage rate, or otherwise, so long as the rate of the finance charge does not exceed that permitted by this section.

If the loan is a precomputed consumer credit transaction:

(a) the finance charge may be calculated on the assumption that all scheduled payments will be made when due; and

(b) the effect of prepayment is governed by the provisions on rebate upon prepayment (Section 37-3-210).

(4) Except as provided in subsection (5), the term of a loan for purposes of this section commences on the day the loan is made. Any month may be counted as one-twelfth of a year but a day is counted as one-three hundred sixty-fifths of a year. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen days may be treated as a full month if periods of fifteen days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted. The administrator may adopt regulations not inconsistent with the Federal Truth in Lending Act with respect to treating as regular other minor irregularities in amount or time.

(5) Subject to classifications and differentiations the lender may reasonably establish, he may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate subsection (1) or (2) if:

(a) when applied to the median amount within each range, it does not exceed the maximum permitted by the applicable subsection,

(b) when applied to the lowest amount within each range, it does not produce a rate of finance charge exceeding the rate calculated according to item (a) by more than eight percent of the rate calculated according to item (a).

(6) Notwithstanding subsection (2), if a lender can demonstrate with competent evidence that (a) any failure to post rates properly filed under Section 37-3-305 or failure to properly file these rates under Section 37-3-305 was a result of a bona fide error or excusable neglect, (b) the rates were properly posted or properly filed when the error or neglect was discovered or brought to the lender's attention, and (c) that no other failure to post or file rates has been brought to the lender's attention by the Department of Consumer Affairs or by consumers within the previous forty-eight month period, then the maximum rate of loan finance charges assessable by the lender is the rate previously properly filed with the Department of Consumer Affairs, provided, however, the lender that has failed or neglected to post rates or to file rates is subject to a civil penalty of up to $5,000.00 payable to the Department of Consumer Affairs.

SECTION 37-3-202. Additional charges.

(1) In addition to the loan finance charge permitted by this chapter a lender may contract for and receive the following additional charges in connection with a consumer loan:

(a) official fees and taxes;

(b) charges for insurance as described in subsection (2);

(c) with respect to open-end credit pursuant to a lender credit card or similar arrangement, as defined in Section 37-1-301(16), which entitles the debtor to purchase or lease goods or services from at least one hundred persons not related to the lender, under an arrangement pursuant to which the debts resulting from the purchases or leases are payable to the lender;

(i) annual charges, payable in advance, for the privilege of using the lender credit card or other credit arrangement; and

(ii) an over-limit charge not to exceed ten dollars if the balance of the account exceeds the credit limit established pursuant to the agreement between the lender and the debtor plus the lesser of ten percent of the credit limit or one hundred dollars. The over-limit charge authorized by this subitem must not be assessed again against the debtor unless the account balance has been reduced below the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars, and the debtor's account balance subsequently exceeds the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars; and

(d) with respect to a loan secured by an interest in land, the following "closing costs", if they are bona fide, reasonable in amount, and not for the purpose of circumvention or evasion of this title:

(i) fees or premiums for title examination, abstract of title, title insurance, surveys, or similar purposes;

(ii) fees for preparation of a deed, settlement statement, or other documents, if not paid to the creditor or a person related to the creditor;

(iii) escrows for future payments of taxes, including assessments for improvements, insurance, and water, sewer, and land rents;

(iv) fees for notarizing deeds and other documents, if not paid to the creditor or a person related to the creditor; and

(v) fees for appraising the real estate that is collateral for the loan, if not paid to the creditor or a person related to the creditor;

(e) charges for other benefits, including insurance, conferred on the debtor, if the benefits are of value to him and if the charges are reasonable in relation to the benefits, are of a type which is not for credit, and are authorized as permissible additional charges by rule adopted by the administrator;

(f) fees and charges paid to persons registered as mortgage loan brokers pursuant to Chapter 58 of Title 40.

(2) An additional charge may be made for insurance written in connection with the loan, other than insurance protecting the lender against the debtor's default or other credit loss with respect to:

(a) insurance against loss of or damage to property, or against liability, if the lender furnishes a clear and specific statement in writing to the debtor, setting forth the cost of the insurance if obtained from or through the lender, and stating that the debtor may choose the person through whom the insurance is to be obtained;

(b) consumer credit insurance providing life, accident and health, or unemployment insurance coverage, if the insurance coverage is not required by the lender, and this fact is clearly and conspicuously disclosed in writing to the debtor, and if, in order to obtain the insurance in connection with the loan, the debtor, or two of them in the case of joint coverage, gives specific, dated, and separately signed affirmative written indication of his desire to do so after written disclosure to him of the cost thereof with a statement similar to the following appearing in caps, underlined, or disclosed in another prominent manner with the consumer signature required by this section: CONSUMER CREDIT INSURANCE IS NOT REQUIRED TO OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL COST; and

(i) to the extent that the insurer has no right of subrogation against the debtor;

(ii) to the extent that the insurance does not duplicate the coverage of other insurance under which loss is payable to the creditor as his interest may appear, against loss of or damage to property for which a separate charge is made to the debtor pursuant to paragraph (a); and

(iii) if a clear, conspicuous, and specific statement in writing is furnished by the creditor to the debtor setting forth the cost of the insurance if obtained from or through the creditor and stating that the debtor may choose the person through whom the insurance is to be obtained; and

(iv) upon application of the consumer for the insurance or for a transaction in which this coverage may be offered in connection with the purchase of a motor vehicle or with the placement of a motor vehicle as collateral, the following notice printed in no smaller than bold-face 13-point type:

"NOTICE: THE INSURANCE COVERAGE YOU ARE PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE EITHER THROUGH THE CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR OWN AGENT."

This notice must be signed by the applicant evidencing his acknowledgment of having read the notice, and be separate and apart from any other form used in the application;

(d) noncredit term life insurance; provided, that the person soliciting the sale of such insurance is properly licensed as required under South Carolina insurance laws and the lender is properly licensed as an agency as required under South Carolina insurance laws and clearly and conspicuously discloses to the insured, prior to the consummation of the insurance purchase, the right to cancel and provides the insured at that time with a form in duplicate signed by the insured. This form shall clearly and conspicuously state in a manner that achieves a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test:

(i) that the purchase of this insurance is not a condition of any loan or extension of credit by including the following language: The purchase of this insurance is not required to obtain credit and will not be provided unless you sign this form and agree to pay the additional cost.";

(ii) that the interest rates and charges do not depend upon the purchase of this insurance;

(iii) that the insured has the option to pay the insurance premium from his own funds or to pay the premium with a portion of the loan proceeds;

(iv) the premium and a description of the coverage, including the face amount, term of the coverage, and any exceptions, limitations, or restrictions;

(v) that the insured may cancel this insurance by mailing a signed request to cancel, together with the policy, to the lender or the insurance company within thirty days after receipt of the policy and, that in the event of cancellation by the insured within thirty days after receipt of the policy, the insured will be promptly refunded the entire premium for such insurance;

(vi) that the insurance laws of South Carolina apply with respect to any type of termination other than as contained in subitem (v) of this item (d) and that the policy should be consulted for more information;

(vii) that the insurance is not tied to the loan in any manner and that if the loan is terminated, the insurance will remain in force unless it is otherwise terminated under the terms of the agreement between the debtor and the insurer;

(viii) the name, address, and phone number of the lender; and

(ix) the name, address, and phone number of the insurance company and the process to be followed in submitting a claim.

The noncredit term life insurance must be underwritten by an insurance company which is properly licensed as required under South Carolina insurance laws. In addition, the noncredit term life insurance must be filed for approval prior to use in accordance with South Carolina insurance laws, and the terms and conditions of the transaction must comply with any other applicable provisions of the South Carolina insurance laws.

If the creditor contracts for or receives a separate charge for insurance, the amount charged for the insurance may not exceed the premium to be charged by the insurer, as computed at the time the charge to the debtor is determined, conforming to any rate filings required by law and made by the insurer with the Director of the Department of Insurance.

Any attempt to tie the sale of the noncredit term life insurance to any loan or extension of credit or otherwise to coerce the debtor into purchasing the insurance is prohibited, and any party engaged in the tying or coercion is subject to penalties in accordance with Section 37-5-202.

(3) With respect to an assumption of an existing obligation, the lender may, in addition to the other authorized charges, charge an assumption fee not exceeding the lesser of four hundred dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is real estate or a residential manufactured home and not exceeding the lesser of fifty dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is personal property other than a residential manufactured home.

SECTION 37-3-203. Delinquency charges.

(1) With respect to a consumer loan including an open-end consumer loan pursuant to a lender credit card or similar arrangement, and any refinancings or consolidations of all such consumer loans, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its due date, as originally scheduled or as deferred, in an amount, not exceeding five dollars which is not more than five percent of the unpaid amount of the installment.

(2) Notwithstanding subsection (1) the lender may contract for and receive a minimum delinquency charge not to exceed forty percent of five dollars as adjusted pursuant to Section 37-1-109. The lender may contract for such a minimum charge even though the charge exceeds five percent of the unpaid amount of the installment.

(3) A statement in the agreement between the lender and the debtor to the effect that the lender may charge the maximum delinquency charge (or late charge) authorized by law entitles the creditor to impose a delinquency charge in the dollar amount specified in subsections (1) and (2) as adjusted pursuant to Section 37-1-109 at the time the delinquency charge is imposed, subject to the five percent of the unpaid amount of the installment limitation, if applicable.

(4) A delinquency charge under this section may be collected only once on an installment however long it remains in default. No delinquency charge may be collected with respect to a deferred installment unless the installment is not paid in full within ten days after its deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter.

(5) A delinquency charge pursuant to this section must not be collected on a payment that is otherwise a full installment payment for the applicable period and is paid on its due date or within ten days after its due date if the only delinquency is attributable to a late fee or a delinquency charge assessed on an earlier installment. It is the intent of the legislature that in construing this subsection, the courts be guided by interpretations to 16 C.F.R. 444.4 and 12 C.F.R. 227.15, as amended from time to time, relating to late charges, given by the Federal Trade Commission, Federal Reserve Board, and the Federal Courts.

(6) If two installments or parts thereof of a precomputed consumer loan are in default for ten days or more, the lender may elect to convert the loan from a precomputed loan to one in which the loan finance charge is based on unpaid balances. In this event, he shall make a rebate pursuant to the provisions on rebate upon prepayment (Section 37-3-210) as if the date of prepayment were one day before the maturity date of a delinquent installment, and thereafter may make a loan finance charge as authorized by the provisions on loan finance charge for consumer loans by lenders not supervised lenders [Section 37-3-201(1)] or finance charge for consumer loans by supervised lenders [Section 37-3-201(2)], whichever is appropriate. The amount of the rebate must not be reduced by the amount of any permitted minimum charge (Section 37-3-210). If the creditor proceeds under this subsection, any delinquency or deferral charges made with respect to installments due on or after the maturity date of the first delinquent installment must be rebated, and no further delinquency or deferral charges may be made.

SECTION 37-3-204. Deferral charges.

(1) In this section and in the provisions on rebate upon prepayment (Section 37-3-210) the following defined terms apply with respect to a precomputed consumer loan:

(a) "Computational period" means (i) the interval between scheduled due dates of instalments under the transaction if the intervals are substantially equal or, (ii) if the intervals are not substantially equal, one month if the smallest interval between the scheduled due dates of instalments under the transaction is one month or more, and, otherwise, one week.

(b) "Deferral" means a postponement of the scheduled due date of an instalment as originally scheduled or as previously deferred.

(d) The "interval" between specified dates means the interval between them including one or the other but not both of them; if the interval between the date of a transaction and the due date of the first scheduled instalment does not exceed one month by more than 15 days when the computational period is one month, or does not exceed 11 days when the computational period is one week, the interval may be considered by the creditor as one computational period.

(e) "Periodic balance" means the amount scheduled to be outstanding on the last day of a computational period before deducting the instalment, if any, scheduled to be paid on that day.

(f) "Standard deferral" means a deferral with respect to a transaction made as of the due date of an instalment as scheduled before the deferral by which the due dates of that instalment and all subsequent instalments as scheduled before the deferral are deferred for a period equal to the deferral period. A standard deferral may be for one or more full computational periods or a portion of one computational period or a combination of any of these.

(g) "Sum of the balances method," also known as the "Rule of 78," means a method employed with respect to a transaction to determine the portion of the loan finance charge attributable to a period of time before the scheduled due date of the final instalment of the transaction. The amount so attributable is determined by multiplying the finance charge by a fraction the numerator of which is the sum of the periodic balances included within the period and the denominator of which is the sum of all periodic balances under the transaction. According to the sum of the balances method the portion of the finance charge attributable to a specified computational period is the difference between the portions of the finance charge attributable to the periods of time including and excluding, respectively, the computational period, both determined according to the sum of the balances method.

(h) "Transaction" means a precomputed consumer loan unless the context otherwise requires.

(2) Before or after default in payment of a scheduled instalment of a transaction, the parties to the transaction may agree in writing to a deferral of all or part of one or more unpaid instalments and the creditor may make at the time of deferral and receive at that time or at any time thereafter a deferral charge not exceeding that provided in this section.

(3) A standard deferral may be made with respect to a transaction as of the due date, as originally scheduled or as deferred pursuant to a standard deferral, of an instalment with respect to which no delinquency charge (Section 37-3-203) has been made or, if made, is deducted from the deferral charge computed according to this subsection. The deferral charge for a standard deferral may equal but not exceed the portion of the loan finance charge attributable to the computational period immediately preceding the due date of the earliest maturing instalment deferred as determined according to the sum of the balances method multiplied by the whole or fractional number of computational periods in the deferral period, counting each day as 1/30 th of a month without regard to differences in lengths of months when the computational period is one month or as 1/7 th of a week when the computational period is one week. A deferral charge computed according to this subsection is earned pro rata during the deferral period and is fully earned on the last day of the deferral period.

(4) With respect to a transaction as to which a creditor elects not to make and does not make a standard deferral or a deferral charge for a standard deferral, a deferral charge computed according to this subsection may be made as of the due date, as scheduled originally or as deferred pursuant to either subsection (3) or this subsection, of an instalment with respect to which no delinquency charge (Section 37-3-203) has been made or, if made, is deducted from the deferral charge computed according to this subsection. A deferral charge pursuant to this subsection may equal but not exceed the rate of loan finance charge required to be disclosed to the debtor pursuant to law applied to each amount deferred for the period for which it is deferred computed without regard to differences in lengths of months, but proportionately for a part of a month, counting each day as 1/30 th of a month or as 1/7 th of a week. A deferral charge computed according to this subsection is earned pro rata with respect to each amount deferred during the period for which it is deferred.

(5) In addition to the deferral charge permitted by this section, a creditor may make and receive appropriate additional charges (Section 37-3-202), and any amount of these charges which is not paid may be added to the deferral charge computed according to subsection (3) or to the amount deferred for the purpose of computing the deferral charge computed according to subsection (4).

(6) The parties may agree in writing at the time of a transaction that, if an instalment is not paid within ten days after its due date, the creditor may unilaterally grant a deferral and make charges as provided in this section. A deferral charge may not be made for a period after the date that the creditor elects to accelerate the maturity of the transaction.

SECTION 37-3-205. Loan finance charge on refinancing.

With respect to a consumer loan, refinancing, or consolidation, the lender may by agreement with the debtor refinance the unpaid balance and may contract for and receive a loan finance charge based on the principal resulting from the refinancing at a rate not exceeding that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate. For the purpose of determining the loan finance charge permitted, the principal resulting from the refinancing comprises the following:

(1) if the transaction was not precomputed, the total of the unpaid balance and the accrued charges on the date of the refinancing, or, if the transaction was precomputed, the amount which the debtor would have been required to pay upon prepayment pursuant to the provisions on rebate upon prepayment (Section 37-3-210) on the date of refinancing, except that for the purpose of computing this amount no minimum charge (Section 37-3-210) shall be allowed; and

(2) appropriate additional charges (Section 37-3-202), payment of which is deferred.

SECTION 37-3-206. Loan finance charge on consolidation.

(1) If a debtor owes an unpaid balance to a lender with respect to a consumer loan, refinancing, or consolidation, and becomes obligated on another consumer loan, refinancing, or consolidation with the same lender, the parties may agree to a consolidation resulting in a single schedule of payments. If the previous consumer loan, refinancing, or consolidation was not precomputed, the parties may agree to add the unpaid amount of principal and accrued charges on the date of consolidation to the principal with respect to the subsequent loan. If the previous consumer loan, refinancing, or consolidation was precomputed, the parties may agree to refinance the unpaid balance pursuant to the provisions on refinancing (Section 37-3-205) and to consolidate the principal resulting from the refinancing by adding it to the principal with respect to the subsequent loan. In either case the lender may contract for and receive a loan finance charge based on the aggregate principal resulting from the consolidation at a rate not in excess of that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate.

(2) The parties may agree to consolidate the unpaid balance of a consumer loan with the unpaid balance of a consumer credit sale. The parties may agree to refinance the previous unpaid balance pursuant to the provisions on refinancing sales (Section 37-2-205) or the provisions on refinancing loans (Section 37-3-205), whichever is appropriate, and to consolidate the amount financed resulting from the refinancing or the principal resulting from the refinancing by adding it to the amount financed or principal with respect to the subsequent sale or loan. The aggregate amount resulting from the consolidation shall be deemed principal, and the creditor may contract for and receive a loan finance charge based on the principal at a rate not in excess of that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate.

SECTION 37-3-207. Conversion to revolving loan account.

The parties may agree to add to a revolving loan account the unpaid balance of a consumer loan, not made pursuant to revolving loan account, or a refinancing, or consolidation thereof, or the unpaid balance of a consumer credit sale, refinancing or consolidation. For the purpose of this section:

(1) the unpaid balance of a consumer loan, refinancing, or consolidation is an amount equal to the principal determined according to the provisions on refinancing (Section 37-3-205); and

(2) the unpaid balance of a consumer credit sale, refinancing, or consolidation is an amount equal to the amount financed determined according to the provisions on refinancing (Section 37-2-205).

SECTION 37-3-208. Advance to perform covenants of debtor.

(1) If the agreement with respect to a consumer loan, refinancing, or consolidation contains covenants by the debtor to perform certain duties pertaining to insuring or preserving collateral and if the lender pursuant to the agreement pays for performance of the duties on behalf of the debtor, the lender may add the amounts paid to the debt. Within a reasonable time after advancing any sums, he shall state to the debtor in writing the amount of the sums advanced, any charges with respect to this amount, and any revised payment schedule and, if the duties of the debtor performed by the lender pertain to insurance, a brief description of the insurance paid for by the lender including the type and amount of coverages. No further information need be given.

(2) A loan finance charge may be made for sums advanced pursuant to subsection (1) at a rate not exceeding the rate stated to the debtor pursuant to the provisions on disclosure (Part 3) with respect to the loan, refinancing, or consolidation, except that with respect to a revolving loan account the amount of the advance may be added to the unpaid balance of the debt and the lender may make a loan finance charge not exceeding that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or for supervised loans (Section 37-3-508), whichever is appropriate.

SECTION 37-3-209. Right to prepay.

Subject to the provisions on rebate upon prepayment (Section 37-3-210), the debtor may prepay in full the unpaid balance of a consumer loan, refinancing, or consolidation at any time without penalty.

SECTION 37-3-210. Rebate upon prepayment.

(1) Except as otherwise provided in this section, upon prepayment in full of a precomputed consumer loan entered into after September 28, 1976, the creditor shall rebate to the debtor an amount not less than the unearned portion of the loan finance charge computed according to this section. If the rebate otherwise required is less than $1.00, no rebate need be made.

(2) Upon prepayment of a consumer loan, whether or not precomputed, except a consumer lease or one pursuant to a revolving loan account, the creditor may collect or retain a minimum charge not exceeding fifteen dollars, if the minimum charge was contracted for and the loan finance charge earned at the time of prepayment is less than the minimum charge contracted for.

(3) In the following subsections these terms have the meanings ascribed to them in subsection (1) of Section 37-3-204: computational period, deferral, deferral period, periodic balance, standard deferral, sum of the balances method, and transaction.

(4) If, with respect to a transaction payable according to its original terms in no more than 61 instalments, the creditor has made either:

(a) no deferral or deferral charge, the unearned portion of the loan finance charge is no less than the portion thereof attributable according to the sum of the balances method to the period from the first day of the computational period following that in which prepayment occurs to the scheduled due date of the final instalment of the transaction; or

(b) a standard deferral and a deferral charge pursuant to the provisions on a standard deferral, the unpaid balance of the transaction includes any unpaid portions of the deferral charge and any appropriate additional charges incident to the deferral, and the unearned portion of the loan finance charge is no less than the portion thereof attributable according to the sum of the balances method to the period from the first day of the computational period following that in which prepayment occurs except that the numerator of the fraction is the sum of the periodic balances, after rescheduling to give effect to any standard deferral, scheduled to follow the computational period in which prepayment occurs. A separate rebate of the deferral charge is not required unless the unpaid balance of the transaction is paid in full during the deferral period, in which event the creditor shall also rebate the unearned portion of the deferral charge.

(5) In lieu of computing a rebate of the unearned portion of the loan finance charge as provided in subsection (4) of this section, the creditor:

(a) shall, with respect to a transaction payable according to its original terms in more than 61 instalments, and a transaction payable according to its original terms in no more than 61 instalments as to which the creditor has made a deferral other than a standard deferral, and

(b) may, in other cases, recompute or redetermine the earned finance charge by applying, according to the actuarial method, the annual percentage rate of finance charge required to be disclosed to the debtor pursuant to law to the actual unpaid balances of the amount financed for the actual time that the unpaid balances were outstanding as of the date of prepayment, giving effect to each payment, including payments of any deferral and delinquency charges, as of the date of the payment. The Administrator shall adopt rules to simplify the calculation of the unearned portion of the finance charge, including allowance of the use of tables or other methods derived by application of a percentage rate which deviates by not more than one-half of one percent from the rate of the loan finance charge required to be disclosed to the debtor pursuant to law, and based on the assumption that all payments were made as originally scheduled or as deferred.

(6) Except as otherwise provided in subsection (5), this section does not preclude the collection or retention by the creditor of delinquency charges (Section 37-3-203).

(7) If the maturity is accelerated for any reason and judgment is entered, the debtor is entitled to the same rebate as if payment had been made on the date judgment is entered.

(8) Upon prepayment in full of a precomputed consumer loan by the proceeds of consumer credit insurance (Section 37-4-103), the debtor or his estate is entitled to the same rebate as though the debtor had prepaid the agreement on the date the proceeds of insurance are paid to the creditor, but no later than 20 business days after satisfactory proof of loss is furnished to the creditor.

PART 3.

DISCLOSURE AND ADVERTISING

SECTION 37-3-301. Application of and compliance with Federal Truth in Lending Act.

A person upon whom the Federal Truth in Lending Act imposes duties or obligations shall make or give to the consumer the disclosures, information and notices required of him by that act and in all respects comply with that act.

SECTION 37-3-302. Receipts; statements of account; evidence of payment.

(1) The creditor shall deliver or mail to the debtor, without request, a written receipt for each payment by coin or currency on an obligation pursuant to a consumer loan. A periodic statement showing a payment received by mail complies with this subsection.

(2) Upon written request of a debtor, the person to whom an obligation is owed pursuant to a consumer loan, except one pursuant to a revolving loan account, shall provide a written statement of the dates and amounts of payments made within the 12 months preceding the month in which the request is received and the total amount unpaid as of the end of the period covered by the statement. The statement shall be provided without charge once during each year of the term of the obligation. If additional statements are requested the creditor may charge not in excess of $2.00 for each additional statement.

(3) After a debtor has fulfilled all obligations with respect to a consumer loan, except one pursuant to a revolving loan account, the person to whom the obligation was owed, upon request of the debtor, shall deliver or mail to the debtor written evidence acknowledging payment in full of all obligations with respect to the transaction.

SECTION 37-3-303. Notice to co-signers and similar parties.

(1) A natural person, other than the spouse of the debtor, is not obligated as a co-signer, co-maker, guarantor, indorser, surety, or similar party with respect to a consumer loan, unless before or contemporaneously with signing any separate agreement of obligation or any writing setting forth the terms of the debtor's agreement, the person receives a separate written notice that contains a completed identification of the debt he may have to pay and reasonably informs him of his obligation with respect to it.

(2) A clear and conspicuous notice in substantially the following form complies with this section:

NOTICE

You agree to pay the debt identified below although you may not personally receive any property, services, or money. You may be sued for payment although the person who receives the property, services, or money is able to pay. This notice is not the contract that obligates you to pay the debt. Read the contract for the exact terms of your obligation.

IDENTIFICATION OF DEBT YOU MAY HAVE TO PAY

______________________________________________________________

(Name of Debtor)

______________________________________________________________

(Name of Creditor)

______________________________________________________________

(Date)

______________________________________________________________

(Kind of Debt)

I have received a copy of this notice.

___________________________________ _________________________

(Date) (Signed)

(3) The notice required by this section need not be given to a seller, lessor, or lender who is obligated to an assignee of his rights.

(4) A person entitled to notice under this section shall also be given a copy of any writing setting forth the terms of the debtor's agreement and of any separate agreement of obligation signed by the person entitled to the notice.

(5) A notice to co-signer which complies with the Federal Trade Commission's Trade Regulation Rule on Credit Practices (16 C.F.R. Section 444) or which complies with a regulation regarding co-signer notices promulgated by any federal agency pursuant to Section 18(f) of the Federal Trade Commission Act, 15 U.S.C. Section 57a(f) (Section 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Public Law 93-63 F) likewise complies with this section, provided that the notice does not indicate that the creditor may collect any amount or engage in any activity which would be illegal under South Carolina law and the notice contains the following information signed and dated by the co-signer:

IDENTIFICATION OF DEBT YOU MAY HAVE TO PAY

______________________________________________________________

(Name of Debtor)

______________________________________________________________

(Name of Creditor)

______________________________________________________________

(Date)

______________________________________________________________

(Kind of Debt)

I have received a copy of this notice.

___________________________________ _________________________

(Date) (Signed)

SECTION 37-3-304. Advertising.

(1) A lender may not advertise, print, display, publish, distribute, broadcast, or cause to be advertised, printed, displayed, published, distributed, or broadcast in any manner any statement or representation with regard to the rates, terms, or conditions of credit with respect to a consumer loan that is false, misleading, or deceptive.

(2) Advertising that complies with the Federal Truth in Lending Act does not violate this section.

(3) This section does not apply to the owner or personnel, as such, of any medium in which an advertisement appears or through which it is disseminated.

SECTION 37-3-305. Filing and posting maximum rate schedule.

(1) Every creditor [Section 37-1-301(13)], other than an assignee of a credit obligation, making supervised or restricted consumer loans (Section 37-3-104) in this State shall on or before the effective date of this section, and in case of a creditor not making supervised consumer loans in this State on that date, on or before the date the creditor begins to make such loans in this State, file with the Department of Consumer Affairs and, except as otherwise provided in this section, post in one conspicuous place in every place of business, if any, in this State in which offers to make consumer loans are extended, a certified maximum rate schedule meeting the requirements set forth in subsections (2), (3), and (4) of this section.

A creditor that has issued lender credit cards or similar arrangements [Section 37-1-301(16)] is not required to post a copy of the required rate schedule in any place of business which is authorized to honor such transactions except its central and branch offices other than a branch office that is a free-standing automatic teller machine; provided, that the creditor shall include a conspicuous statement of the maximum rate it intends to charge for these transactions in the initial disclosure statement required to be provided the debtor by the Federal Truth-In-Lending Act and notifies the debtor of any change in the maximum rate on or before the effective date of the change.

(2) The rate schedule required to be filed and posted by subsection (1) must contain a list of the maximum rate of loan finance charge (Section 37-3-109) stated as an annual percentage rate, determined in accordance with the Federal Truth-In-Lending Act and Federal Reserve Board Regulation Z, that the creditor intends to charge for consumer credit transactions in each of the following categories of credit:

(a) unsecured personal loans;

(b) secured personal loans other than those secured by real estate;

(d) open-end (revolving) credit;

(e) all other.

The creditor may include as many subcategories as it chooses under each of the specified categories, and may, at its option, include a series of rates for different dollar amounts and maturities. A creditor may omit one or more of the categories from the rate schedule if the creditor does not make consumer credit transactions falling within the omitted categories.

If a variable rate is applicable to one or more categories or subcategories, the rate schedule must designate the rate as a variable rate and disclose the index for calculating changes in the rate and the cap or other limitation, if any, on any increases or decreases in the rate.

(3) The rate schedule that is filed by the creditor shall be reproduced in at least fourteen-point type for posting as required by subsection (1). The terms "Loan Finance Charge" and "Annual Percentage Rate" will be printed in larger size type than the other terms in the posted rate schedule. The following statement shall be included in the posted rate schedule:

"Consumers: All supervised and restricted creditors making consumer loans in South Carolina are required by law to post a schedule showing the maximum rate of LOAN FINANCE CHARGES stated as ANNUAL PERCENTAGE RATES that the creditor intends to charge for various types of consumer credit transactions.

The purpose of this requirement is to assist you in comparing the maximum rates that creditors charge, thereby furthering your understanding of the terms of consumer credit transactions and helping you to avoid the uninformed use of credit.

NOTE: Creditors are prohibited only from granting consumer credit at rates higher than those specified above. A creditor may be willing to grant you credit at rates that are lower than those specified, depending on the amount, terms, collateral and your credit worthiness."

(4) A rate schedule filed and posted as required by this section shall be effective until changed in accordance with this subsection. A creditor wishing to change any of the maximum rates shown on a schedule previously filed and posted or to add or delete the prescribed categories or subcategories shall file with the Department of Consumer Affairs, in duplicate, together with the required fee specified in subsection (6) and shall post as required by subsection (1) a revised schedule of maximum rates. The revised schedule shall be certified and returned to the creditor if properly filed. The revised rate schedule shall be effective for all consumer credit extended after the close of business on the day the certified schedule is received by the creditor or seven days after the date of submission postmark, whichever is earlier. The posting or changes in connection with lender credit cards and similar arrangements shall be made in accordance with subsection (1).

(5) A creditor shall have no obligation to print the maximum rate schedule in any public advertisement that mentions rates charged by that creditor.

(6) The Department of Consumer Affairs shall maintain a file for each creditor containing the original and all revised rate schedules filed by the creditor. A certified copy of each filing showing the date and time it was received must be sent to the creditor making the filing at the time of its receipt. A fee of twenty dollars for each rate schedule filed by a creditor is payable to the Department of Consumer Affairs for its services in maintaining the rate schedule files and providing one certified copy of each rate filing to the creditor. Additional certified copies of a filing must be provided at a charge of four dollars for each copy.

(7) The Commission on Consumer Affairs shall promulgate a regulation pursuant to subsection (2) of Section 37-6-506 establishing the filing procedures for and the format of the rate schedules prescribed by this section.

(8) Every creditor shall file at least one maximum rate schedule and pay at least one forty-dollar filing fee during each state fiscal year disclosing that creditor's existing maximum rates plus an additional forty dollars for each additional location. This filing and fee required of each creditor is due annually before the thirty-first day of January of each year. If this filing does not change any maximum rates previously filed, the creditor is not required to alter posted maximum rates. If any creditor has not filed a maximum rate schedule with the Department of Consumer Affairs by the thirty-first day of January of the year in which it is due, then on this date the filing is no longer effective and the maximum credit service charge that the creditor may impose on any credit extended after that date may not exceed eighteen percent a year until such time as the creditor files a revised maximum rate schedule that complies with this section. The Department of Consumer Affairs shall retain thirty dollars of each fee to offset the cost of administering and enforcing this chapter and Chapter 2 of this title. This revenue may be applied to the cost of operations and any unexpended balance carries forward to succeeding fiscal years and must be used for the same purposes.

(9) On loans with a cash advance [Section 37-1-301(30)] not exceeding six hundred dollars, a licensed lender may not post a rate which exceeds the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate or that rate filed and posted pursuant to this section, whichever is less.

SECTION 37-3-306. Notice of assumption rights.

(1) Every creditor engaged in this State in making consumer loans pursuant to a lender credit card or similar arrangement shall:

(a) file on or before January thirty-first of each year with the Department of Consumer Affairs for every lender card plan it offers to South Carolina residents the disclosures required for credit and charge card applications and solicitations by the Federal Truth-In-Lending Act, Federal Reserve Board Regulation Z, Section 226.5a(b), 12 C.F.R. Section 226.5a(b), and any amendments or replacements thereto. The disclosures required by this section must be based on fees and charges and other terms in effect as of December thirty-first of the prior year. The required disclosures may be filed by providing one or more actual applications or solicitations used by the creditor which contain the required disclosures on one or more of the model forms in Appendix G of Federal Reserve Board Regulation Z. The annual filing fee for each creditor is twenty dollars, payable at the time the disclosures are filed regardless of the number of filings; and

(b) file with the Department of Consumer Affairs current figures on the disclosures required by item (a) within thirty days after receiving a written request for this information from the administrator. No filing fee may be imposed for this information request.

(2) Failure to file the disclosures required by this section and any errors in these disclosures does not affect the validity of any transaction or the maximum rates or charges in any transaction made by the creditor but the creditor is subject to the administrative remedies in Part 1 of Chapter 6.

SECTION 37-3-308. Manufactured home loan disclosure; material terms.

(A) An estimate of the disclosures required by Section 37-3-301 is required in connection with a loan for the purchase, refinance, or consolidation of a loan secured by a borrower-occupied manufactured home not less than two days before the consummation of the transaction as defined in 12 C.F.R. Section 226.2(a)(13). The estimated disclosure must be accompanied by the itemization of the amount financed. With respect to a loan secured by real property, the disclosures required by the Federal Real Estate Settlement Procedures Act are applicable.

(B) If the lender turns down the applicant for the credit sale before making the disclosures, the disclosures as provided in subsection (A) are not required.

(C)(1) If the lender determines that a material term of the loan sale must change, then the lender shall redisclose the estimated disclosures to conform to the changed terms and the transaction must not be consummated until one day after the redisclosure.

(2) A material term of the credit sale includes:

(a) the number of payments of the transaction;

(b) a feature of the transaction causing it to be an alternative mortgage transaction as defined in 12 U.S. Code Section 3802(1) when the transaction as previously disclosed was not an alternative mortgage transaction;

(c) a term or fee in the transaction or combination of terms or fees causing the annual percentage rate to vary more than one quarter of one percent of the annual percentage rate previously disclosed; or

(d) any insurance premiums, prepaid finance charges, third-party fees, or preparation charges that vary from the previously disclosed insurance premiums, prepaid finance charges, third-party fees, or preparation charges by lesser than five hundred dollars in the aggregate or one percent of the estimated amount disclosed pursuant to subsection (A) above.

PART 4.

LIMITATION ON AGREEMENTS

SECTION 37-3-401. Scope.

This part applies to consumer loans.

SECTION 37-3-402. Balloon payments.

(1) Except as provided in subsection (2), if any scheduled payment of a consumer loan is more than twice as large as the average of earlier scheduled payments, the consumer has the right to refinance, without penalty, the amount of that payment at the time it is due. The terms of the refinancing shall be no less favorable to the consumer than the terms of the original transaction.

(2) This section

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CHAPTER 3 - LOANS