SB253 Alabama 2010 Session

Summary

Primary Sponsor

Wendell Mitchell

Democrat

Session

Regular Session 2010

Title

Mini-Code, consumer credit transactions, late charge increased under certain conditions, Sec. 5-19-4 am'd.

Summary

SB253 would set a higher, contract-based late charge for defaulted payments under Alabama's Mini-Code, with a defined calculation and cap, and clarify related refund and fee rules.

What This Bill Does

It revises the late charge for defaulted consumer credit payments to be the greater of $10, $18, or 5% of the default amount, not to exceed $100, and allows only one late charge per scheduled payment if the contract states it. It also preserves and clarifies additional charges for deferring unpaid payments, and lays out how refunds or credits are calculated when a balance is paid early or when the debt is renewed or refinanced. The bill also lists permissible fees for real-property secured loans and allows points up to 5% of the principal or line of credit; open-end credit plans are treated separately for these provisions.

Who It Affects

• Consumers with loans or credit lines governed by the Alabama Consumer Credit Act: could face higher late charges (within the new formula) and are subject to defined deferral charges, plus specific refund/credit rules on early payoff and refinancing.
• Creditors and lenders offering such consumer credit transactions: may impose late charges per the new formula (greater of $10, $18, or 5% with a $100 cap) and may charge defined fees for real-property secured loans and points, subject to structural limits; open-end plans are exempt from some subsections.

Key Provisions

• Late charge on defaulted payments set as the greater of $10, $18, or 5% of the scheduled payment, not to exceed $100, and collected only once per payment if stated in the contract.
• Deferral of unpaid payments may incur an additional monthly charge, calculated as a proportion of the finance charge tied to the deferred balance.
• Refunds/credits for early payoff or refinancing/renewal are specified, using actuarial methods for long-term loans and the Rule of 78s for others, with pro rata calculations within 90/120 days depending on refinancing timing.
• Permitted fees for real-property secured loans include title work, deeds, appraisal fees, notary and credit report fees, and other legally prescribed charges; points up to 5% of the original principal or total line of credit; open-end plans are treated separately.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Banks and Banking