SB70 Alabama 2011 Session

Summary

Primary Sponsor

Gerald O. Dial

Republican

Session

Regular Session 2011

Title

Alabama Consumer Credit Act (Mini-Code), consumer credit transactions, late charge increased under certain conditions, Sec. 5-19-4 am'd.

Summary

SB70 would amend the Alabama Consumer Credit Act to set a contract-based cap on late charges, tying the maximum to limits in the Alabama Small Loan Act and allowing the charge only if the contract says so.

What This Bill Does

It establishes the maximum late charge for defaulted payments as the greater of $10 or 5% of the scheduled payment, not to exceed the Small Loan Act limit and $100, charged only once per payment if the contract allows it. It adds a rule for an additional monthly charge for full months of unpaid deferments when the finance charge is prepaid (precomputed). It also clarifies refunds and charging rules for early payoff, renewals/refinancing, and certain secured-property fees, while excluding open-end credit plans from some of these provisions. The act would take effect immediately after passage.

Who It Affects

• Consumers with a scheduled payment in a consumer credit transaction in Alabama would be subject to the new late-charge cap, deferral charges, and refund rules if applicable.
• Creditors and lenders who issue consumer credit transactions (including those governed by the Small Loan Act) would apply the contract-based late-charge limits and related fee and refund provisions; open-end credit plans would be largely exempt from these subsections.

Key Provisions

• Late charge cap: the charge may not exceed the greater of $10 or 5% of the defaulted payment, not to exceed the amount allowed by the Alabama Small Loan Act (5-18-15.1) and $100, and may be charged only once per scheduled payment if the contract stipulates it.
• Deferral charges: for one or more unpaid payments using a precomputed finance charge, a creditor may charge an additional amount for each full month unpaid, equal to the proportion of the finance charge tied to the deferred amounts.
• Refunds for early payoff: refunds are calculated using actuarial methods (longer-term) or the rule of 78ths for others, with a minimum refund of $1 and using the nearest scheduled date if prepaid mid-cycle.
• Renewals/refinancings: if debt is renewed or refinanced within 90 days (120 days after 1997) the debtor gets a pro rata refund of unearned finance charges as of the refinancing date; after the stated period, refunds follow the method in the early payoff provision.
• Real property fees and points: allows certain fees (title, appraisal, notary, etc.) to be charged to unrelated parties; points may be up to 5% of the original balance (closed-end) or line of credit (open-end), fully earned on the date of transaction and possibly excluded from the finance charge for refunds.
• Open-end plans: subsections (b)-(e) do not apply to open-end credit plans; refunds for unearned finance charges apply only if a precomputed charge is included in the transaction.

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