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Debt Laws | Federal
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State Laws
Maryland Retail Installment Sales
Commercial Law Article
Title 12. Credit Regulations
Subtitle 6. Retail Installment Sales
(a) In this subtitle the following words have the meanings indicated.
(b) "Agreement" means an installment sale agreement, a renewed or extended installment sale agreement, and any renewal, extension, or refund agreement made in connection with an installment sale agreement.
(c) (1) "Buyer" means a person who buys or leases goods under an installment sale agreement, even though the person has entered into one or more renewal, extension, or refund agreements.
(2) "Buyer" includes a prospective buyer.
(d) "Cash price" means the minimum price for which goods subject to an installment sale agreement, or other goods of like kind and quality, may be purchased for cash from the seller by the buyer.
(e) (1) "Collateral security" means any security interest in, encumbrance on, or pledge of property or goods that is given to secure performance of an obligation of a buyer or a surety for a buyer under an agreement.
(2) "Collateral security" includes the undertaking of a surety for a buyer.
(3) "Collateral security" does not include any goods or interest in goods that are the subject of an installment sale agreement.
(f) "Consumer goods" means goods bought for use primarily for personal, family, or household purposes, as distinguished from industrial, commercial, or agricultural purposes.
(g) "County" includes Baltimore City.
(h) "Debt cancellation agreement" means an agreement between a seller and a buyer which provides for cancellation of the outstanding balance payable under an installment sale agreement in the event of theft or total destruction of the motor vehicle that is the subject of the installment sale agreement after application of the proceeds of any insurance maintained on the motor vehicle.
(i) "Down payment" includes all amounts paid in cash, credits, or the agreed value of goods, by or for a buyer and to or for the benefit of a seller at or before execution of an installment sale agreement.
(j) "Finance charge" means the amount in excess of the cash price of the goods sold, agreed on by a seller and a buyer, to be paid by the buyer for the privilege of purchasing the goods under an installment sale agreement.
(k) (1) "Goods" means all tangible personal property that has a cash price of $25,000 or less.
(2) "Goods" does not include money or things in action.
(l) "Holder" means a person, including a seller and a sales finance company, entitled to enforce an agreement against a buyer.
(m) (1) "Installment sale agreement" means a contract for the retail sale of consumer goods, negotiated or entered into in this State, under which:
(i) Part or all of the price is payable in one or more payments after the making of the contract; and
(ii) The seller takes collateral security or keeps a security interest in the goods sold.
(2) "Installment sale agreement" includes:
(i) A prospective installment sale agreement;
(ii) A purchase money security agreement; and
(iii) A contract for the bailment or leasing of consumer goods under which the bailee or lessee contracts to pay as compensation a sum that is substantially equal to or is more than the value of the goods.
(3) "Installment sale agreement" does not include:
(i) A bona fide C.O.D. transaction or a layaway agreement as defined in § 14-1101(g) of this article; or
(ii) A lease for industrial, commercial, or agricultural purposes.
(n) "Mechanical repair contract" has the meaning stated in Title 15, Subtitle 3 of the Transportation Article.
(o) "Motor vehicle" has the meaning stated in Title 11 of the Transportation Article.
(p) "Outstanding balance", when used in reference to a debt cancellation agreement, does not include:
(1) Any delinquent payments;
(2) Past due charges;
(3) Late payment charges;
(4) Unearned interest;
(5) Unearned rental payments; or
(6) By agreement of the parties, the amount of any primary insurance deductible.
(q) "Person" includes an individual, corporation, business trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity.
(r) "Principal balance" means the sum of items described in § 12-606(b)(5), (6), and (7) of this subtitle.
(s) "Retail sale" means the sale of goods for use or consumption by the buyer or for the benefit or satisfaction that the buyer may derive from the use or consumption of the goods by another, but not for resale by the buyer.
(t) "Sales finance company" means a person who is engaged, whether by purchase, discount, pledge, loan, or otherwise, in the business of acquiring, investing in, or lending money or credit on the security of any interest in:
(1) An installment sale agreement made between other parties;
(2) A retail credit account transaction, as defined in § 12-501 of this article, made between other parties; or
(3) A transaction that deals with home improvement, as defined in § 8-101 of the Business Regulation Article, made between other parties, if collateral security is required by and given to the contractor as a condition to the transaction.
(u) "Security interest" has the meaning stated in § 1-201(37) of this article.
(v) "Seller" means a person who sells or leases or agrees to sell or lease goods under an installment sale agreement.
(w) (1) "Surety" includes a guarantor.
(2) "Surety" does not include a seller who sells, transfers, or assigns an agreement.
(x) "Time balance" means the sum of the items described in § 12-606(b)(10) and (11) of this subtitle.
(y) "Wages" means all remuneration paid to any employee for his employment, including the cash value of all remuneration paid in any medium other than cash.
A seller or sales finance company may not make in any advertisement, publication, display, broadcast, solicitation, or representation any false, misleading, or deceptive statement relating to:
(1) Any finance, delinquency, or extension charge or rate; or
(2) The security interest, collateral, terms, or conditions on which it will make or finance any installment agreement.
A seller or sales finance company may not discriminate against a buyer solely on the basis of the sex, marital status, geographic area of residence, neighborhood of residence, or age of the buyer. Refusal to grant credit to a buyer who is under the age of 18 is not discrimination solely on the basis of age.
An installment sale agreement shall be evidenced by an instrument in writing which contains all of the agreements of the parties. It shall be signed by all parties before the seller delivers to the buyer any of the goods covered by the agreement.
(a) (1) At or before the time the buyer signs an installment sale agreement, the seller shall deliver to him an exact copy of it.
(2) If the seller does not sign the copy, and if, within 15 days after the buyer signs the installment sale agreement, the seller does not deliver to the buyer a copy of it signed by the seller, the installment sale agreement and the instruments signed by the buyer are void without any action by the buyer, and the seller immediately shall refund to the buyer all of his payments and deposits.
(b) (1) Until the buyer signs an installment sale agreement and receives a copy of it signed by the seller, he has an unconditional right to cancel it and receive immediate refund of all payments and deposits made on account or in contemplation of it.
(2) The buyer's request for the refund operates as cancellation of the installment sale agreement.
(c) Until the buyer signs an installment sale agreement and receives a copy of it signed by the seller, if a payment or deposit is accepted by the seller, he immediately shall deliver to the buyer a receipt for it which clearly states in 12-point type or larger the buyer's rights under subsection (b) of this section.
(d) An acknowledgment of delivery of a copy of an installment sale agreement shall be printed in 12-point type or larger, and, if the acknowledgment is contained in the agreement, it shall be printed immediately below the signature to the agreement and independently signed.
(a) An installment sale agreement shall:
(1) State the full name, place of residence, and post office address of each party to it;
(2) State the date when signed by the buyer; and
(3) Contain a clear description of the goods sold sufficient to identify them readily.
(b) An installment sale agreement also shall state in simple tabular form the following separate items in the following order:
(1) The cash price of the goods sold;
(2) All charges for delivery, installation, or repair of or other services to the goods which, separate from the cash price, are included in the installment sale agreement;
(3) The sum of the cash price in item (1) and the charges for services in item (2);
(4) The amount of the buyer's down payment, together with:
(i) A statement of the respective amounts credited for cash, credits, and the agreed value of goods;
(ii) A statement of amounts actually paid or to be paid by the seller pursuant to an agreement with the buyer, on behalf of the buyer to discharge any amount financed under an outstanding loan agreement or installment sale agreement or the unpaid portion of the early termination obligation under any lease or other obligation of the lessee, with respect to a motor vehicle or other property traded in;
(iii) A statement of the net amount available to reduce the cash price, which is item (i) of this item less item (ii) of this item; and
(iv) A description of all goods sufficient to identify them;
(5) The unpaid balance of the cash price payable by the buyer to the seller, which is item (3) less item (4);
(6) The cost to the buyer of any insurance for the payment of which credit is to be extended to the buyer, together with:
(i) The amount or extent of the insurance;
(ii) The expiration date of the insurance;
(iii) The party to whom the insurance is payable; and
(iv) A concise description of the coverage, including, if the goods sold include a motor vehicle, a definite statement in 12-point bold type or larger as to whether the insurance includes coverage for personal liability and for property damage caused to others;
(7) The amount of any official fees charged to the buyer which the seller expects to be paid to a public official for filing or recording the installment sale agreement or other instrument securing or evidencing the buyer's obligation or an equal or lesser amount for a nonfiling insurance premium at rates approved by the Insurance Commissioner and on which no commissions may be paid;
(8) The cost to the buyer of any optional debt cancellation agreement sold in connection with a motor vehicle;
(9) The principal balance owed, which is the sum of items (5), (6), (7), and (8) plus, if the amount stated in item (4)(iii) of this subsection is a negative number, add that amount as a positive number;
(10) The finance charge stated as a sum in dollars; and
(11) The time balance owed by the buyer to the seller, which is the sum of items (9) and (10), the number of installment payments required to pay it, and the amount and time of each payment.
(c) In addition to the items in subsections (a) and (b) of this section, the installment sale agreement shall:
(1) State clearly any collateral security taken for the buyer's obligation under it; and
(2) Contain the following notice in 12-point bold type or larger, directly above the space reserved in the agreement for the signature of the buyer:
Notice to Buyer
1. You are entitled to a copy of this agreement at the time you sign it.
2. Under the State law regulating installment sales, you have certain rights, among others:
(1) To pay off the full amount due in advance and obtain a partial rebate of the financing charge;
(2) To redeem the property if repossessed for a default;
(3) To require, under certain conditions, a resale of the property, if repossessed.
(d) A seller may not be deemed to be making loans for purposes of § 11-301(b)(6)(i) of the Financial Institutions Article merely by engaging in activities described in subsection (b)(4)(ii) of this section.
(a) A holder may not take or receive any instrument from a buyer or a surety for a buyer, which contains:
(1) Except as provided in subsection (b) of this section, any blank space to be filled in after the instrument is signed by a party to it;
(2) A confession of judgment or any power of attorney to appear for the buyer or for a surety for the buyer to confess judgment;
(3) A schedule of payments under which any installment, except the down payment, is more than double the average of all other installments, excluding the down payment, or under which the interval between any consecutive installments is less than one-half the average of all other intervals, unless the buyer is given an absolute right, on default in any of the excess or irregular installments, to have the schedule of unpaid installments, including that in default, revised to conform in both amounts and intervals to the average of all preceding installments and intervals;
(4) A provision for repossession of the goods or for the acceleration of the time when any part or all of the time balance becomes payable, if the condition of the repossession or acceleration is that the holder considers himself insecure;
(5) A provision by which the buyer waives or purports to waive a tort claim or by which the seller has the right to enter unlawfully upon any premises;
(6) A provision by which a person acting on behalf of a holder in connection with the formation or execution of an agreement is treated as an agent of the buyer; or
(7) An assignment or order for payment of wages, whether earned or to be earned.
(b) If, at the time of its execution, an installment sale agreement contains a sufficient description of the goods as required by § 12-606 of this subtitle, further serial numbers or other identifying marks on the goods may be inserted in the agreement on delivery of the goods.
(a) This section applies to an installment sale agreement negotiated and entered into without personal solicitation by a salesman or other representative of a seller, if the seller's prices, terms of payment, and other terms are clearly set forth in a catalog or other printed solicitation of business which is generally available to the public and contains at least two copies of the form of the agreement.
(b) If the buyer enters into a sale described in subsection (a) of this section, all of the provisions of this subtitle apply, except that:
(1) The seller is not required to deliver a copy of the installment sale agreement to him;
(2) If the installment sale agreement received by the seller from the buyer contains blank spaces to be filled in or corrections to be made, the seller may insert or correct in the appropriate blank spaces the amounts of money and other terms set forth in the seller's catalog then in effect; and
(3) Instead of the copy of the installment sale agreement required by § 12-605 of this subtitle, the seller shall furnish to the buyer, within 15 days from the date of shipment of the goods, a written statement of the items inserted in the blank spaces.
(a) The finance charge imposed on the sale of a motor vehicle may not exceed an amount computed using the following annual simple interest rates of finance charge:
(1) Class 1: A new motor vehicle -- 16.5 percent on the outstanding balance;
(2) Class 2: A used motor vehicle designated by the manufacturer by a model year not more than two years before the year in which the sale is made -- 22 percent on the outstanding balance; and
(3) Class 3: A used motor vehicle designated by the manufacturer by a model year more than two years before the year in which the sale is made -- 27 percent on the outstanding balance.
(b) (1) A service or other charge not specifically provided for in this section may not be included in a retail installment sale of a motor vehicle.
(2) (i) This section does not prohibit a seller from financing the cost to the buyer of a mechanical repair contract sold in connection with a motor vehicle, provided that the cost of the mechanical repair contract is separately itemized in the financing agreement.
(ii) A seller may finance the cost of a mechanical repair contract sold in connection with a motor vehicle whether or not the motor vehicle is covered by an original manufacturer's warranty.
(3) A seller may not require a buyer of a motor vehicle, as a condition of receiving a loan, to enter a mechanical repair contract.
(4) A seller may contract for, charge for, receive, and finance the cost to the buyer of an optional debt cancellation agreement sold in connection with a motor vehicle, provided that the cost of the debt cancellation agreement is separately itemized in the financing agreement.
(c) Except for an overcharge which results from a bona fide error in computation and which is corrected within 60 days from the date of the agreement, if a holder collects a charge greater in amount than the maximum permitted by this section, he shall forfeit to the buyer all finance charges paid or payable under the agreement.
(d) (1) A holder may not collect from the buyer a greater amount for insurance than that allowed by the State Insurance Department for the insurer carrying the risk.
(2) The insurance for which the holder may collect from the buyer is limited to automobile bodily injury and property damage liability, automobile physical damage, life and accident, medical reimbursement, and nonfiling insurance.
(3) Except for an overcharge which results from a bona fide error in computation and which is corrected within 60 days from the date of the agreement, if a holder collects from the buyer a charge for insurance greater than that permitted under this subsection, he shall pay to the buyer a sum equal to ten times the amount of the overcharge.
(e) A finance charge in excess of the rates provided in this section may be imposed on the sale of new and used trucks, new and used truck tractors, new and used trailers, or new and used semitrailers purchased for industrial, commercial, or agricultural purposes.
(f) Notwithstanding subsection (a) of this section, the finance charge imposed on a motor vehicle sold under a contract may not exceed the following annual simple interest rates of finance charge:
(1) Class 1: A new motor vehicle -- 24 percent on the outstanding balance; and
(2) Class 2: A used motor vehicle designated by the manufacturer by a model year not more than 2 years before the year in which the sale is made -- 24 percent on the outstanding balance.
(g) A seller may assign a retail installment agreement and receive a portion of the finance charge only if the fact is disclosed in the agreement. The specific amount to be received need not be disclosed.
Except as provided in § 12-609 of this subtitle as to a motor vehicle, and notwithstanding the provisions of any other statutory law, in the retail sale of consumer goods bought under an installment sale agreement, including any add-on contract described in § 12-618 of this subtitle, the finance charge may not exceed the greater of:
(1) An amount computed using the following annual simple interest rates of finance charge:
(i) 22 percent on that part of the outstanding balance not exceeding $1,000; and
(ii) 18 percent on that part of the outstanding balance exceeding $1,000; or
(2) A minimum charge of $10 or, if the date of the last installment is eight months or less after the effective date of the installment sale agreement, $8.
(3) Notwithstanding the provisions of subsection (1) of this section, a seller may charge a finance charge at a rate not in excess of 24 percent per annum simple interest on the outstanding balance under an installment sale agreement made on or after July 1, 1982.
Any agreement made before July 1, 1982, which is refinanced at a higher rate allowed by § 12-609(f) or § 12-610(3) of this subtitle must comply with the following requirements:
(1) The holder must give the following disclosures in writing to the buyer prior to the execution by the buyer of the new agreement:
If you do agree to consolidate your existing obligation, you will be paying an annual percentage rate of . . . .% on the existing net balance of $. . . . . ., instead of the rate of . . . . .% which you are now paying.
Schedule of Monthly Payments
Separate Purchase Agreements
$ . . . . per month for
the next . . . . months
then
$ . . . . per month for
. . . . months after that
Consolidated Purchase Agreement
$ . . . . per month for
the next . . . . months
Total of Payments
Separate agreements
$ . . . . total of
payments for your
existing purchases
. . . total of payments
for your new purchases
Consolidated agreement
$ . . . . total of payments
for your consolidated
purchases
(2) The holder must allow the buyer the choice of repaying his existing purchase balance at the originally agreed upon rate and obtaining any additional extension of credit as a separate agreement, notwithstanding any law which limits the holder's ability to have more than 1 agreement with the same buyer;
(3) An existing balance may be refinanced only upon the buyer's request;
(4) The holder must refund or credit to the buyer's account any unearned finance charge and any returned insurance premiums upon the cancellation of insurance sold in connection with the purchases;
(5) The holder must allow the buyer the right to cancel the consolidated purchase agreement within 3 business days and to elect the separate account option pursuant to subsection (2). The holder shall provide to the buyer conspicuous notice of the provisions of this subsection; and
(6) Nothing in this subsection shall prohibit the receipt of goods or services by the buyer at the time the consolidated purchase agreement is made.
A holder may not enter into a retail installment sales agreement, providing for an initial rate of finance charge pursuant to § 12-609(f) or § 12-610(3) of this subtitle, which contains a provision that permits the holder to increase or decrease the applicable rate of finance charge from time to time during the term of an agreement.
(a) (1) The finance charge under an installment sale agreement relating to consumer goods or a motor vehicle may be computed:
(i) On the actual unpaid principal outstanding from time to time; or
(ii) In advance, at the time the agreement is made, by adding to the principal balance the amount of the finance charge that would be earned if the installment sale agreement were repaid exactly according to its terms at the applicable rate.
(2) Nothing in this subtitle shall be construed to prohibit any particular method of computing the finance charge on an installment sale agreement so long as the amount of the finance charge does not result in a rate of finance charge in excess of that permitted by § 12-609 or § 12-610 of this subtitle, as applicable.
(b) Amounts due under an installment sale agreement relating to consumer goods may be payable in successive monthly, semimonthly, or weekly installments.
(c) As part of the regular practice of a holder, he may include fractional periods of 15 days or more as a whole month if he also entirely excludes fractional periods of 14 days or less.
(d) Unless the buyer has notice of an assignment of an installment sale agreement relating to consumer goods, his payments to the last known holder of the agreement shall discharge his obligation to the extent of the payments.
(a) Notwithstanding the provisions of § 12-601(k) of this subtitle, for the purposes of this section, "goods" means any personal property bought for use primarily for personal, family, or household purposes regardless of the cash price of the goods.
(b) A buyer may prepay at any time, without penalty, all or part of the outstanding balance payable under an installment sale agreement relating to consumer goods.
(c) (1) Except as provided in subsection (d) of this section, if the buyer pays the balance in full before maturity, the holder immediately shall refund to him a portion of the finance charge, including the charge provided for in § 12-610(2) of this subtitle.
(2) The amount of the refund shall be calculated according to the actuarial method based on the original schedule of payments.
(d) If a prepayment is made, the holder is entitled to retain a finance charge of at least $6.
(e) If the amount of the credit prepayment is less than $1, no refund need be made.
(a) The provisions of this section are in addition to and not in substitution for any other applicable provision of statutory law.
(b) If a holder undertakes at the expense of the buyer to sell, purchase, or supply insurance on the goods sold, the amount charged the buyer for the insurance may not exceed the lesser of:
(1) The premium actually payable by the holder; or
(2) The rate charged for similar insurance coverage by those companies whose rates are promulgated by a nationally recognized organization of underwriters.
(c) (1) If the buyer is charged for insurance, the holder shall deliver or mail to the buyer at his address shown on the agreement, within 25 days after delivery of the goods, a copy of each insurance policy or an owner's certificate representing the policy, which sets forth:
(i) The amount of the premium, type of insurance, scope of coverage, and each term, exception, limitation, restriction, and condition of the insurance contract; and
(ii) If the goods sold include a motor vehicle, a definite statement in 12-point bold type or larger as to whether the insurance includes coverage for personal liability and for property damage caused to others.
(2) If the holder assigns the agreement and has not complied with the requirements of this subsection, the assignee shall deliver or mail in like manner to the buyer the copy or certificate, within the same period or within five days after the assignment, whichever is later.
(d) Each cancellation, surrender, or other refund and each dividend received under the insurance policy by the holder immediately shall be remitted to the buyer or credited against any amount then due by the buyer to the holder under the agreement.
(e) (1) If the amount charged for insurance exceeds the amount authorized by subsection (b) of this section, the buyer may deduct the overcharge from the amount of any payment.
(2) If the buyer does not deduct the overcharge from his payment, the holder shall credit the amount of the overcharge against the last installment or installments under the agreement.
(f) (1) If the seller or his assignee does not comply with the requirements of subsection (c) of this section, the buyer may deduct the full amount charged to him for the insurance from the amount of any payment.
(2) If the buyer does not deduct the amount charged from his payment, the holder shall credit the amount charged against the last installment or installments under the agreement.
(a) Except as provided in subsection (b) of this section, a holder may not directly or indirectly contract for, charge, or receive from a buyer or a surety for a buyer on account of or in connection with any agreement, any charge or amount for the extension of credit, interest, fees, commissions, delinquency, collection, repossession, and foreclosure or otherwise.
(b) A holder may charge the buyer the following charges or fees:
(1) Subject to the provisions of § 12-630 of this subtitle, the time balance of an installment sale agreement;
(2) If allowed by a court as costs, the official fees paid to a public official in connection with a proceeding to:
(i) Recover possession of the goods;
(ii) Enforce any obligation of the buyer or his surety; or
(iii) Realize on any security interest or collateral security;
(3) If no charge was made in the agreement on account of the insurance for the period covered, the premiums for insurance as provided by § 12-613 of this subtitle;
(4) The amount paid for copies of agreements and statements of accounts pursuant to § 12-621 of this subtitle;
(5) Charges permitted by:
(i) §§ 12-623 and 12-626 of this subtitle for delinquencies and repossession expenses; and
(ii) Law for extensions and refunds; and
(6) An amount not exceeding $15 if payment is made with a check that is dishonored on the second presentment.
(a) (1) If, in addition to any down payment, a buyer is required under an installment sale agreement to make a payment to a seller before the seller is obligated to deliver the goods sold, the buyer may cancel the installment sale agreement before delivery or tender of the goods by the seller.
(2) Notwithstanding any provision of the installment sale agreement, if it is canceled pursuant to this subsection, the seller shall refund to the buyer within ten days after notice of the cancellation an amount equal to at least 90 percent of all payments made by the buyer under the installment sale agreement, including any down payment.
(b) If, because of a down payment made under an installment sale agreement, the buyer is entitled to delivery of the goods before making any further payment and the buyer refuses to accept delivery of the goods in accordance with the installment sale agreement, all or part of his down payment may be forfeited to the extent provided in the installment sale agreement.
(a) If the holder does not pay out to a public official the full amount charged to the buyer for filing and recording instruments, the buyer shall receive credit for the amount so charged to him and not paid out.
(b) The holder shall credit the amount of the overcharge against the last installment or installments under the agreement.
(a) (1) If a payment is made on account of an agreement, the person receiving the payment shall give the buyer on his request, or, if payment is made in cash, without request, a complete written receipt for the payment.
(2) If the buyer specifies that the payment is made on one of several obligations, the receipt shall so indicate. However, this provision does not affect the allocation of payments under an add-on contract pursuant to § 12-618 of this subtitle.
(b) (1) Unless a written notice of actual or intended assignment of an agreement is given to the buyer, he may pay or tender any amount due under the agreement or give any notice required by the agreement or this subtitle to the last known holder of the agreement.
(2) A payment, tender, or notice so given is binding on any subsequent holder or assignee as fully as if made to him.
(a) In this section, "add-on contract" means an installment sale agreement which allows the inclusion in it of additional goods subsequently purchased and under which the amount due on the subsequent purchase is combined with an unpaid balance on any prior purchase so as to permit the seller to retain a security interest in all goods under that agreement.
(b) If goods are purchased under an add-on contract, the seller shall deliver to the buyer and attach to the add-on contract, at the time of the additional purchase, a statement which:
(1) Contains all information regarding the additional purchase required by § 12-606 of this subtitle; and
(2) Shows:
(i) The amount due on the installment sale agreement immediately before the additional purchase;
(ii) The amount due after the additional purchase;
(iii) The payments agreed to be made subsequently; and
(iv) The number of additional months required to complete the payments.
(c) (1) If a payment is made on an add-on contract after an additional purchase is added, the payment is considered as applied to each of the separate purchases in the same proportion which the cash price of each purchase bears to the total cash price of all goods in which the seller retains a security interest.
(2) Before repossessing or attempting to repossess any goods under an add-on contract, the seller shall apply all payments made to him by the buyer in the manner provided by paragraph (1) of this subsection.
(3) If the amount due on any separate purchase is paid fully, the goods paid for are the absolute property of the buyer and may not be subject to repossession for any subsequent default on the agreement.
(d) The buyer under an add-on contract may prepay at any time the amount due on any of the separate purchases in the manner provided by § 12-620 of this subtitle.
(e) If the goods subject to an add-on contract are repossessed, the buyer may redeem any of the separate purchases by payment of the amount due on that purchase alone.
(a) The holder of an installment sale agreement on which the finance charge is computed in advance may:
(1) By agreement with the buyer, extend the scheduled due date or defer the scheduled payment of all or part of the installments payable under it; and
(2) Charge the buyer an extension or deferral charge.
(b) The extension or deferral charge may not exceed an amount equal to 1 percent per month of the amount extended or deferred for the period of extension or deferral.
(c) The period of extension or deferral may not exceed the period from the date when the extended or deferred amount would have been payable in the absence of the extension or deferral to the date when the amount is made payable under the agreement of extension or deferral.
(a) Notwithstanding the provisions of § 12-601(k) of this subtitle and any provision of an installment sale agreement to the contrary, a buyer may prepay at any time, without penalty, all or any part of the unpaid time balance payable under the installment sale agreement if such agreement is for the retail sale of personal property purchased primarily for personal, family, or household purposes, regardless of the original price of that personal property.
(b) (1) Except as provided in paragraph (2) of this subsection, if the buyer pays the time balance in full before maturity, the holder immediately shall refund to him a portion of the finance charge. The amount of the refund shall be calculated by the actuarial method based on the original schedule of payments.
(2) If the amount of the credit for prepayment is less than $1, no refund need be made.
(a) At any time after execution of an agreement, but not later than one year after the last payment is made under it, the holder shall deliver or mail to the buyer at his last known address, within 10 days after the holder receives a written request from the buyer, a copy of the agreement and a signed statement which sets forth:
(1) The amount paid by or on behalf of the buyer, and the allocation of the amount between principal obligations and charges, including charges for delinquencies, expenses of repossession, extensions, and refunds;
(2) Any amount which remains payable, and the allocation of the amount between principal obligations and charges, including charges for delinquencies, expenses of repossessions, extensions, and refunds; and
(3) The number of installments payable in the future, and the amount and time of each.
(b) The statement shall be supplied free of charge, except that a fee of 50 cents may be charged for any statement supplied within 60 days after a prior statement was supplied.
(a) After the buyer has paid all sums due under an agreement, the holder shall deliver or mail to the buyer at his last known address, within 15 days after the holder receives a written request from the buyer:
(1) A signed statement which describes the goods and states that all payments due or to become due under the agreement are paid in full;
(2) Good and sufficient instruments to release all security interests in the goods and collateral security owned by the buyer; and
(3) Good and sufficient assignments and instruments necessary to vest the buyer with complete evidence of title.
(b) After the buyer has paid all sums due under an agreement, the holder shall deliver or mail to each surety for the buyer and to each person who is the owner of collateral security, within 15 days after the holder receives a request from the buyer, surety, or other person:
(1) A signed statement which shows that the suretyship is completely discharged; and
(2) Good and sufficient instruments to release any collateral security owned by that person.
(c) If the holder fails to comply with the requirements of this section, he shall forfeit $10 to the buyer and is liable for damages.
(a) If an agreement on which the finance charge is computed in advance so provides, the holder of the agreement may collect a delinquency or collection charge of the lesser of $10 or 5 percent of the amount of any payment in default, if the default has continued for at least 10 days.
(b) (1) In addition to the delinquency or collection charge, the agreement may provide for the payment of:
(i) Attorney's fees not exceeding 15 percent of the amount due and payable under the agreement; and
(ii) Court costs.
(2) Attorney's fees may be collected only if the agreement is referred for collection to an attorney who is not a salaried employee of the holder.
(a) The holder may repossess goods sold under an agreement if:
(1) The buyer is in default in:
(i) The payment of any sum due under the agreement;
(ii) The performance of any other condition which the agreement lawfully requires him to perform in order to obtain unencumbered title to the goods; or
(iii) The performance of any promise the breach of which is expressly made a ground for repossessing the goods; or
(2) The goods were seized by a police department, bureau, or force.
(b) (1) The holder may repossess goods only by:
(i) Legal process; or
(ii) Self-help, without use of force.
(2) Nothing in this section authorizes a violation of criminal law.
(c) (1) At least 10 days before he repossesses any goods, the holder may serve a written notice on the buyer of his intention to repossess the goods.
(2) The notice shall:
(i) State the default and any period at the end of which the goods will be repossessed; and
(ii) Briefly state the rights of the buyer in case the goods are repossessed.
(3) The notice may be delivered to the buyer personally or sent to him at his last known address by registered or certified mail.
(d) Within five days after he repossesses the goods, the holder shall deliver to the buyer personally or send to him at his last known address by registered or certified mail, a written notice which briefly states:
(1) The right of the buyer to redeem the goods, and the amount payable for them;
(2) The rights of the buyer as to a resale, and his liability for a deficiency; and
(3) The exact location where the goods are stored and the address where any payment is to be made or notice delivered.
(a) For 15 days after the holder gives the notice required by § 12-624(d) of this subtitle, the holder shall retain any repossessed goods in the county where the goods were sold to the buyer or were repossessed.
(b) During the period provided for in subsection (a) of this section, the buyer may:
(1) Redeem and take possession of the goods; and
(2) Resume the performance of the agreement.
(c) To redeem the goods, the buyer shall:
(1) Tender the amount due under the agreement at the time of redemption, without giving effect to any provision which allows acceleration of any installment otherwise payable after that time;
(2) Tender performance of any other promise for the breach of which the goods were repossessed; and
(3) If the discretionary notice provided for in § 12-624(c) of this subtitle was given, pay the actual and reasonable expenses of retaking and storing the goods.
(d) This section does not apply if the goods were seized by a police department, bureau, or force and the goods were repossessed because of that seizure, in which event, the buyer shall have no right to redeem or take possession, even if the buyer tenders payment of the entire balance due under the agreement.
(e) Notwithstanding subsections (b) and (c) of this section:
(1) The holder shall have the right to require the buyer to tender payment of the entire balance due under the agreement if:
(i) The date of the default in the payments due under the agreement that led to the present repossession occurred within 18 months after the last repossession; or
(ii) The buyer was guilty of fraudulent conduct, intentionally and wrongfully concealed, removed, damaged, or destroyed the goods, or attempted to do so, and the goods were repossessed because of that conduct.
(2) Under paragraph (1) of this subsection, the payment by the buyer of the entire balance due under the agreement shall:
(i) Constitute redemption by the buyer; and
(ii) Entitle the buyer to take possession of the goods.
(a) Subject to the provisions of subsection (b) of this section, the holder shall sell any repossessed goods at public auction if the buyer:
(1) Has paid at least 50 percent of the cash price of the goods; and
(2) Within the 15-day period provided for in § 12-625(a) of this subtitle, requests sale of the goods in writing sent to the holder by registered or certified mail.
(b) (1) To cover the costs of the sale, at the time a buyer requests sale of the goods he shall deposit with the holder an amount equal to the lesser of:
(i) 10 percent of the time balance due at the time of repossession; or
(ii) $10.
(2) If the buyer does not make the deposit at the time of his request, the holder promptly shall notify the buyer in writing sent by registered or certified mail of the deposit requirement. If the buyer fails to make the deposit within five days after he receives the notice from the holder, his right to have the goods sold at public auction is forfeited.
(c) The sale of goods at public auction shall take place within 30 days from the date the buyer requested the sale.
(d) At least 10 days before the sale, the holder shall notify the buyer in writing sent by registered or certified mail of the time and place of the sale.
(e) (1) The provisions of this subsection (e) apply to:
(i) A public sale held under the provisions of this section; and
(ii) Any other bona fide public or private sale of goods which had a cash price in excess of $2,000 at the time of their purchase by the buyer, if the buyer has not paid at least 50 percent of the cash price of the goods or if he has paid that amount but has not requested a public sale under subsection (a) of this section.
(2) The proceeds of a sale to which this subsection applies, including the deposit required by subsection (b) of this section, shall be applied, in the following order, to:
(i) The actual and reasonable cost of the sale;
(ii) The actual and reasonable cost of retaking and storing the goods; and
(iii) The unpaid balance owing under the agreement at the time the goods are repossessed.
(3) After application of the proceeds and deposit in accordance with paragraph (2) of this subsection, any remaining balance shall be paid to the buyer, unless the sale occurred because of the seizure of the goods by a police department, bureau, or force, in which event the remaining balance shall be paid to the police department, bureau, or force that seized the goods, to be disposed of in accordance with the provisions of Title 12 of the Criminal Procedure Article or any other law that applies to the seizure and forfeiture of the goods.
(4) If the proceeds and deposit are insufficient to pay the items enumerated in paragraph (2) of this subsection, the buyer is liable for the deficiency if:
(i) The agreement provides for liability for a deficiency; and
(ii) The holder has complied with all requirements of this subtitle, including the notice requirement of § 12-624(d) of this subtitle.
(f) The holder shall furnish to the buyer a written statement which shows the disposition of the proceeds and deposit.
If there is no resale of repossessed goods under § 12-626 of this subtitle, all obligations of the buyer under the agreement shall be discharged, and the holder may retain the goods as his own property without obligation to account to the buyer.
(a) If, as part of an installment sale, a promissory note is taken by a seller or sales finance company, the note shall refer to the agreement out of which it arises.
(b) If the note is assigned, it is subject to all defenses which the buyer might have asserted against the seller or sales finance company, except that an acknowledgment by the buyer of delivery of a copy of the agreement pursuant to § 12-605 of this subtitle is conclusive proof of the delivery in favor of an assignee of the note without actual knowledge to the contrary.
No act, agreement, or statement of a buyer in an agreement may constitute a valid waiver of any benefit or protection provided to him under this subtitle.
(a) Except as provided by subsections (b) and (c) of this section, a holder may not collect or receive any finance, delinquency, or collection charge from the buyer if:
(1) The agreement does not contain the information required by §§ 12-604 through 12-606 of this subtitle;
(2) The seller fails to deliver to the buyer a required copy of the agreement; or
(3) The agreement contains a finance charge in excess of the applicable charge permitted by § 12-609 or § 12-610 of this subtitle.
(b) Written acknowledgment by the buyer of delivery of a copy of the agreement pursuant to § 12-605 of this subtitle is conclusive proof of the delivery as between the buyer and any assignee of the agreement without actual knowledge to the contrary.
(c) If the seller or any subsequent holder unintentionally and in good faith fails to comply with any provision of §§ 12-609 through 12-612 of this subtitle, the holder may correct the error within 10 days after:
(1) He notices it; or
(2) The buyer notifies him in writing of the error.
(d) If an instrument contains any provision prohibited by § 12-607 of this subtitle, that provision is void and the holder may not collect or receive from the buyer, in connection with the transaction to which the instrument relates, any finance, delinquency, or collection charge.
(e) The penalties of this section are in addition to those provided in Part IV of this subtitle or in any other statutory law.
(a) If a complaint for violation of any provision of Part II of this subtitle is filed with the Commissioner of Financial Regulation, he may investigate the complaint and hold a hearing on it in accordance with § 11-413 of the Financial Institutions Article.
(b) The Commissioner shall give to the person complained against at least ten days' written notice of the complaint and the time and place of any hearing. The notice shall be in writing and sent by registered or certified mail to his principal place of business.
(c) (1) If, after the hearing, the Commissioner finds that a person has engaged or is engaging in any act or practice prohibited by Part II of this subtitle, he shall order the person to cease and desist from the act or practice.
(2) The order of the Commissioner shall comply with the Administrative Procedure Act.
(d) (1) If no appeal is filed, the order becomes final after expiration of the time allowed by the Administrative Procedure Act for appeals from the Commissioner's order.
(2) If an appeal is filed, the order becomes final after final decision of the court affirming the order or dismissing the appeal.
(e) For the purposes of this section, the Commissioner's order may not apply to any:
(1) Incorporated bank, savings institution, or trust company;
(2) A savings and loan association; or
(3) A federal credit union or State chartered credit union.
In connection with an installment sale agreement, a sales finance company may:
(1) Renew or extend the time for payment of any installment sale agreement or any installment; or
(2) Refund to the buyer, for subsequent repayment by him, the amount of any installment previously paid.
(a) (1) Except as provided in paragraph (2) of this subsection, any renewal, extension, or refund made under § 12-632 of this subtitle shall be by a written agreement signed by each party.
(2) If an extension is granted without any additional charge, the agreement need be signed only by the sales finance company.
(b) (1) At the time a renewal, extension, or refund is made, the sales finance company shall deliver to the buyer an exact copy of the agreement.
(2) The agreement shall:
(i) State the name and post office address of each party;
(ii) Identify the prior agreement to which it relates;
(iii) Describe the goods;
(iv) Describe any security interest or collateral security which was reserved or taken to secure the prior agreement and which is retained to secure the renewal, extension, or refund; and
(v) State the amount of the extended principal, the agreed rate of charge, the number of scheduled installments, and the time and amount of each installment.
(a) A sales finance company may charge the buyer for a renewal, extension, or refund made under § 12-632 of this subtitle, an amount not exceeding an annual effective rate of simple interest, as defined in Subtitle 1 of this title, of 15 percent per annum on the balances outstanding from time to time of the extended principal, from the date of the renewal, extension, or refund to the date set for the final payment.
(b) The extended principal may not exceed the aggregate amount of the unpaid portion of the time balance under the agreement, any delinquency charges lawfully payable, and any amount of cash actually refunded to the buyer, less a credit for prepayment computed as if the unpaid portion of the time balance had been paid in full at the time of the renewal, extension, or refund.
(c) Notwithstanding the provisions of subsection (a) of this section, a sales finance company may charge an annual effective rate of simple interest of 24 percent on renewals or extensions on contracts made on or after July 1, 1982, on the balances outstanding from time to time.
(d) No sales finance company may charge the rates permitted by subsection (c) of this section unless the sales finance company complies with the limitations of §§ 12-610.1 and 12-610.2 of this subtitle and provided that such a renewal or extension agreement may not provide for a balloon payment.
(a) A sales finance company shall permit a buyer to prepay in full or in part at any time, without penalty, the outstanding balance payable under a renewal, extension, or refund agreement.
(b) If a buyer prepays the entire outstanding balance, the sales finance company shall pay or credit to him the unearned portion of the charge.
(a) Any person who knowingly violates or participates in the violation of any provision of Part II of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $100 for the first offense and not exceeding $500 for any subsequent offense.
(b) Any person who violates or participates in the violation of any provision of Part III of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $500 or imprisonment not exceeding six months or both.
MD Maryland Official State Statutes
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