HB 99

Existing law provides that if a guaranteed asset protection waiver is canceled due to early termination of the finance agreement, the creditor, administrator, or other authorized party shall provide any refund due to a borrower within 60 days of termination without requiring the borrower to request cancellation of the waiver

This bill would extend the refund period to 120 days

To amend Section 8-37-6 as added to the Code of Alabama 1975, by Act 2017-392 (Acts 2017, 2017 Regular Session) relating to guaranteed asset protection waivers; to require a creditor or the administrator or retail seller of a motor vehicle to provide, within 120 days of termination, any refund due to a borrower if a guaranteed asset protection waiver is canceled due to early termination of the finance agreement without requiring the borrower to request cancellation of the waiver.

Section 1

Section 8-37-6 as added to the Code of Alabama 1975, by Act 2017-392 (Acts 2017, 2017 Regular Session) is amended to read as follows:

§8-37-6.

(a) Guaranteed asset protection waiver agreements shall be cancellable. GAP waivers shall provide that if a borrower cancels a waiver within the Free Look Period, the creditor, administrator, or other authorized party shall provide the borrower a full refund of the purchase price of the GAP waiver, provided no benefits have been provided. In the event a borrower cancels the waiver after the Free Look Period and no benefits have been provided, the creditor, administrator, or other authorized party shall provide the borrower a pro rata refund of the purchase price, less any cancellation fee no greater than fifty dollars ($50) in accordance with the terms of the waiver.

(b) In the event of cancellation of the GAP waiver due to early termination of the finance agreement, the creditor shall provide, or cause the administrator or retail seller to provide, within 60 120 days of termination, any refund due to a borrower without requiring the borrower to request cancellation of the waiver.

(c) Any cancellation refund under subsection (a) or (b) may be applied by the creditor as a reduction of the amount owed under the finance agreement unless the borrower can show that the finance agreement has been paid in full."

Section 2

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.