Chapter 422

422.201(5)(b) (b) The dollar amount of finance charge shall include the prepaid finance charge excluded from the amount financed; and

422.201(5)(c) (c) The effect of prepayment is governed by the provisions on rebate upon prepayment under s. 422.209.

422.201(6) (6) For the purposes of this section, the term of a consumer credit transaction other than one pursuant to an open-end credit plan commences with the date the credit is granted or, if goods are delivered, services performed or proceeds of a loan paid 10 days or more after that date, with the date of commencement of delivery or performance. Differences in lengths of months are disregarded and a day may be counted as one-thirtieth of a month.

422.201(7) (7) Subject to classifications and differentiations the merchant may reasonably establish, the merchant may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate sub. (2) or (3) as the case may be if:

422.201(7)(a) (a) When applied to the median amount within each range, it does not exceed the maximum permitted by sub. (2) or (3) as the case may be; and

422.201(7)(b) (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 par. (a) by more than 8 percent of the rate calculated according to par. (a).

422.201(8) (8) That portion of the finance charge consisting of an amount equal to a discount of 5 percent or less of the stated price which is offered to induce payment in full within a stated period of time in connection with a sale of particular goods and services for which credit is not otherwise available from the merchant shall not be included in the finance charge for the purpose of determining the maximum rate of finance charge under sub. (2) or (3) with respect to a customer who does not pay in full within such time.

422.201(9) (9) Notwithstanding sub. (2) or (3), a merchant may contract for and receive a minimum finance charge with respect to a transaction other than one pursuant to an open-end credit plan, of not more than $5 when the amount financed does not exceed $75, or $7.50 when the amount financed exceeds $75.

422.201(10m) (10m) A finance charge determined by application of a periodic rate shall be determined by applying the periodic rate to one of the following:

422.201(10m)(a) (a) The average daily balance of the account.

422.201(10m)(b) (b) The unpaid balance of the account on the last day of the billing cycle after first deducting all payments, credits and refunds during the billing cycle.

422.201(10m)(c) (c) The median amount within a specified range within which the unpaid balance as calculated according to par. (a) or (b) is included. A charge may be made under this paragraph only if the creditor, subject to classifications and differentiations the creditor may reasonably establish, makes the same charge on all balances within the specified range and if the percentage when applied to the median amount within the range does not exceed the charge resulting from applying that percentage to the lowest amount within the range by more than 8 percent of the charge on the median amount.

422.201(10s) (10s) Regardless of the date that an open-end credit plan is entered into, the parties may agree to the payment by the customer of a finance charge at any periodic rate.

422.201(11) (11) Anything to the contrary in this chapter notwithstanding, with respect to consumer credit sales and consumer loans secured by real property and insured or guaranteed by the federal government, or any agency or instrumentality thereof, this chapter shall not prohibit or limit any charges which are required by statutes, rules or regulations of such government, agency or instrumentality.

422.201(12m) (12m) This section does not apply to consumer credit sales of or consumer loans secured by a first lien on or equivalent security interest in mobile homes or manufactured homes, as defined in s. 101.91, if the sales or loans are made on or after November 1, 1981.

422.201(13) (13) A violation of this section is subject to s. 425.305.

422.201 History History: 1971 c. 239; 1973 c. 2; 1979 c. 10, 168, 176; 1981 c. 45, 100; 1983 a. 389; 1985 a. 29; 1987 a. 27; 1989 a. 56; 1991 a. 316; 1995 a. 328, 329; 1997 a. 35, 302; 1999 a. 9, 31, 53; 2007 a. 11; 2009 a. 177, 405.

422.201 Cross-reference Cross-reference: See also ch. DFI-WCA 1, Wis. adm. code.

422.201 Annotation The scope of apparent agency may embrace the making of a usurious loan. Hollingsworth v. American Finance Corp., 86 Wis. 2d 172, 271 N.W.2d 872 (1978).

422.201 Annotation The sale of an interest-bearing note at a discount is not usurious unless it is found to be a cloak or cover for what is in reality a usurious loan. Val Zimmermann Corp. v. Leffingwell, 107 Wis. 2d 86, 318 N.W.2d 781 (1982).

422.201 Annotation Accord and satisfaction is not a defense to a claim of usury under the consumer act. Clark v. Aetna Finance Corp., 115 Wis. 2d 581, 340 N.W.2d 747 (Ct. App. 1983).

422.202 422.202 Additional charges.

422.202(1) (1) In addition to the finance charge permitted by this subchapter, a merchant may bargain for and receive any of the following additional charges in connection with a consumer credit transaction:

422.202(1)(a) (a) Official fees and taxes.

422.202(1)(b) (b) Charges or premiums for insurance against loss of or damage to property in which the creditor takes a security interest or to property leased under a motor vehicle consumer lease or against liability arising out of the ownership or use of property in which the creditor takes a security interest or of property leased under a motor vehicle consumer lease, if all of the following conditions are met:

422.202(1)(b)1. 1. A clear, conspicuous and specific statement in writing is furnished by the creditor to the customer setting forth the cost and term of the insurance if obtained from or through the merchant and stating that the customer may choose the person through which the insurance is to be obtained.

422.202(1)(b)2. 2. The creditor mails or delivers to the customer a notice of the customer’s right to cancel the insurance obtained from or through the merchant in accordance with s. 424.304.

422.202(1)(c) (c) Charges in real property transactions as provided in sub. (2).

422.202(1)(d) (d) With respect to a consumer credit transaction which is other than one pursuant to an open-end credit plan and which is entered into on or after May 17, 1988, a charge not to exceed $15 for each check presented for payment to a creditor which is returned unsatisfied because the drawer does not have an account with the drawee, does not have sufficient funds in his or her account or does not have sufficient credit with the drawee.

422.202(1)(e) (e) With respect to a motor vehicle consumer lease, any reasonable fee or charge that is conspicuously disclosed in writing to the prospective lessee before execution of the motor vehicle consumer lease, is agreed upon by the lessor and lessee and is not prohibited by chs. 421 to 427 and 429.

422.202(2) (2) With respect to a consumer credit transaction which involves a manufactured home transaction as defined in s. 138.056 (1) (bg) or the extension of credit secured by an interest in real property, the parties may agree to the payment by the customer of the following charges in addition to the finance charge, if they will be paid to persons not related to the merchant, are reasonable in amount, bona fide and not for the purpose of circumvention or evasion of this subchapter:

422.202(2)(a) (a) Fees or premiums for title examination, title insurance or similar purpose;

422.202(2)(b) (b) Fees for preparation of a deed, settlement statement or other documents;

422.202(2)(c) (c) Fees for notarizing deeds and other documents;

422.202(2)(d) (d) Appraisal fees; and

422.202(2)(e) (e) Survey costs.

422.202(2m) (2m) With respect to an open-end credit plan, regardless of when the plan was entered into:

422.202(2m)(a) (a) A creditor may charge, collect and receive other fees and charges, in addition to the finance charge authorized under s. 422.201, that are agreed upon by the creditor and the customer. These other fees and charges may include periodic membership fees, cash advance fees, charges for exceeding a designated credit limit, charges for late payments, charges for providing copies of documents and charges for the return of a dishonored check or other payment instrument.

422.202(2m)(b) (b) For purposes of 12 USC 85, 1463 (g), 1785 and 1831d, both the finance charge under s. 422.201 and charges permitted under par. (a) are interest and may be charged, collected and received as interest by a creditor.

422.202(2s) (2s) 

422.202(2s)(a) (a) A creditor may contract for and collect from the borrower, or include in the amount financed, any of the following:

422.202(2s)(a)1. 1. Charges or premiums for consumer credit insurance, as defined in s. 424.201, consisting of consumer credit life insurance, credit accident and sickness insurance and credit unemployment insurance against loss of income of debtors resulting from either labor disputes or involuntary unemployment if all of the following conditions are met:

422.202(2s)(a)1.a. a. The insurance coverage is not required by the creditor and that fact is clearly and conspicuously disclosed in writing to the customer.

422.202(2s)(a)1.b. b. Any customer desiring the insurance coverage gives a specific, separately signed, affirmative written indication of the desire after receiving written disclosure of the cost and term of the insurance.

422.202(2s)(a)2. 2. Charges or premiums for insurance other than insurance described in subds. 1., 3. and 4., subs. (1) (b) and (2) (a) and s. 421.301 (20) (f) if all of the following conditions are met:

422.202(2s)(a)2.a. a. The insurance coverage is not required by the creditor and that fact is clearly and conspicuously disclosed in writing to the customer.

422.202(2s)(a)2.b. b. Any customer desiring the insurance coverage gives a specific, separately signed, affirmative written indication of the desire after receiving written disclosure of the cost and term of the insurance.

422.202(2s)(a)2.c. c. The creditor mails or delivers to the customer a notice of the customer’s right to cancel the insurance in accordance with s. 424.401.

422.202(2s)(a)3. 3. Charges or fees for future service contracts or motor club service contracts if all of the following conditions are met:

422.202(2s)(a)3.a. a. Membership is not required as a condition of the extension of credit.

422.202(2s)(a)3.b. b. The term of the membership does not exceed one year or the creditor mails or delivers to the customer a notice of the customer’s right to cancel the contract or membership in accordance with s. 424.401.

422.202(2s)(a)4. 4. Charges or fees for mechanical breakdown, extended warranty or maintenance service contracts or insurance if purchase of the contract or insurance is not required as a condition of the extension of credit.

422.202(2s)(a)5. 5. Other charges not constituting finance charges as approved by written opinion of the administrator or not disapproved under s. 426.104 (4) (b).

422.202(2s)(b) (b)

422.202(2s)(b)1. 1. Notwithstanding par. (a), in a consumer credit transaction other than one pursuant to an open-end credit plan, a creditor may sell and finance the products described in par. (a) 2., 3. and 4. without regard to the limitations contained in those subdivisions or in s. 424.301 (1) to (3) if the transaction is solely to purchase the products described in par. (a) 2., 3. and 4. and if the transaction is not evidenced by a credit contract that is signed by the customer on the same day as a contract evidencing any other consumer credit transaction with the creditor.

422.202(2s)(b)2. 2. Notwithstanding par. (a), in a consumer credit transaction pursuant to an open-end credit plan, a creditor may sell and finance the products described in par. (a) 2., 3. and 4. without regard to the limitations contained in those subdivisions or in s. 424.301 if the transaction is solely to purchase the products described in par. (a) 2., 3. and 4. and if the transaction is not evidenced by a credit document that is signed by the customer on the same day as the document evidencing consummation of the open-end credit plan.

422.202(3) (3) 

422.202(3)(a) (a) For purposes of chs. 421 to 427, any charge not authorized by this section shall be considered part of the finance charge. An additional charge authorized by this section but assessed in a manner inconsistent with this section is not part of the finance charge unless, except with respect to the charges under sub. (1), the creditor requires the charge as an incident to or a condition of the extension of credit.

422.202(3)(b) (b) Except as otherwise provided in chs. 421 to 427, assessing an additional charge which is not authorized by this section and which is not included by the creditor as part of the finance charge, or which is authorized by this section but assessed in a manner inconsistent with this section, is a violation subject to s. 425.304.

422.202(3)(c) (c) A merchant may not, in the same transaction, be subject to the penalty in s. 138.09 (9) (b), 218.0161 (1), or 425.305 and the penalty in s. 425.304, based on the assessment of the same additional charges.

422.202 History History: 1971 c. 239; 1973 c. 3; 1975 c. 362, 371, 372, 375, 407, 422; 1979 c. 89; 1981 c. 45, 314; 1983 a. 389; 1985 a. 29, 256; 1987 a. 399; 1993 a. 71, 150; 1995 a. 328, 329; 1997 a. 252; 1999 a. 31; 2007 a. 11; 2023 a. 267.

422.202 Cross-reference Cross-reference: See also ss. DFI-WCA 1.263 and 1.264, Wis. adm. code.

422.202 Annotation Legislative Council Note, 1973: [As to sub. (1) (c)] Allows creditors to treat so-called “mortgage redemption insurance” as an additional charge. This is insurance written on long-term obligations, such as mortgages, which would not qualify as credit insurance, as that term is defined, because of its longer term. The effect of this amendment is to allow premiums for such insurance to be treated as additional charges, similar to insurance defined as “credit insurance”, as long as the amount and term does not exceed the outstanding balance and term of the indebtedness.

422.202 Annotation [As to sub. (2) (b) (intro.)] Broadens the range of real estate transactions in which specified additional charges may be made. As the section reads prior to the above amendment, only the creditor holding a first mortgage or equivalent security interest may pass on these incidental charges, which include such items as title examination or title insurance fees, and fees for deed preparation, notarizing documents and appraisals to the extent that they are customarily borne by the customer in a cash transaction. The problem which arises from this approach is that these costs are incurred by other creditors in real estate transactions, but these creditors are unable to treat them in the same manner as the first mortgage; i.e., pass them on to the customer. The change made by this section is designed to insure equal treatment of purchase money creditors, regardless of the priority of their security interest, creditors refinancing a first mortgage and creditors financing substantial improvements of real property. [Bill 432-A]

422.203 422.203 Delinquency charges.

422.203(1) (1) With respect to a consumer credit transaction other than one pursuant to an open-end credit plan, the parties may agree to a delinquency charge on any installment not paid in full on or before the 10th day after its scheduled or deferred due date in an amount not to exceed $10 or 5 percent of the unpaid amount of the installment, whichever is less.

422.203(2) (2) No delinquency charge may be collected on an installment which is paid in full on or before the 10th day after its scheduled or deferred due date even though an earlier maturing installment or a delinquency charge on an earlier installment may not have been paid in full. For purposes of this subsection payments are applied first to current installments and then to delinquent installments.

422.203(3) (3) A delinquency charge under sub. (1) may be collected only once on an installment however long it remains in default. A delinquency charge may not be collected for a late installment if, with respect to that installment, there has been a deferral.

422.203(4) (4) 

422.203(4)(a) (a) With respect to a consumer credit transaction, interest after the final scheduled maturity date may not exceed the greater of either 12 percent per year or the annual rate of finance charge assessed on that transaction if the transaction is entered into on or after April 6, 1980 and prior to November 1, 1981, and may not exceed the maximum rate permitted by s. 138.05 (1) (a), if the transaction is entered into prior to April 6, 1980, but if such interest is charged no delinquency charge may be taken on the final scheduled installment.

422.203(4)(c) (c) With respect to a consumer credit transaction, interest after the final scheduled maturity date shall not exceed the greater of either 12 percent per year or the annual rate of finance charge assessed on that transaction if the transaction is entered into on or after November 1, 1981, but if interest is charged no delinquency charge may be taken on the final scheduled installment.

422.203(5) (5) A violation of this section is subject to s. 425.304.

422.203 History History: 1971 c. 239; 1979 c. 10, 168; 1981 c. 45; 1991 a. 39; 1997 a. 302.

422.203 Annotation A fee that is required in order to allow the reinstatement of payments after a default is a delinquency charge. Burny v. Thorn, 944 F. Supp. 762 (1996).

422.204 422.204 Deferral charges.

422.204(1) (1) With respect to a precomputed consumer credit transaction, the parties may at any time agree in writing to a deferral of all or part of one or more unpaid installments, and the creditor may make and collect a charge but:

422.204(1)(a) (a) With respect to a precomputed transaction which is scheduled to be repaid in substantially equal successive installments at approximately equal intervals, if the deferral is made as of an installment due date and the payment dates for all wholly unpaid installments are deferred for one or more full installment periods and the maturity is extended for a corresponding period, the deferral charge shall not exceed the portion of the precomputed finance charge attributable to the final installment of the original schedule of payments multiplied by the total number of installments to be deferred and by the number of full installment periods in the deferment period; or

422.204(1)(b) (b) If the deferral is not made pursuant to par. (a) the deferral charge shall not exceed the rate previously disclosed to the customer pursuant to the provisions on disclosure in subch. III, applied to the amount or amounts deferred for the period of deferral calculated without regard to differences in the lengths of months, but proportionally for a part of a month, counting each day as one-thirtieth of a month.

422.204(2) (2) A deferral charge may be collected at the time it is assessed or at any time thereafter.

422.204(3) (3) The deferment period is that period of time in which no payment is required or made by reason of the deferral.

422.204(4) (4) Any payment received at the time of the deferment may be applied first to the deferral charge and the remainder, if any, to the unpaid balance of the transaction, but if such payment is sufficient to pay, in addition to the appropriate delinquency charge, any installment which is in default, it shall be first so applied, and such installment shall not then be deferred or subject to the deferral charge.

422.204(5) (5) No installment on which a delinquency charge has been collected shall be deferred or included in the computation of the deferral unless such delinquency charge is refunded to the customer or credited to the deferral charge.

422.204(6) (6) In addition to the deferral charge, the merchant may make appropriate additional charges as provided in s. 422.202. The amount of such charges which is not paid in cash may be added to the amount deferred for the purpose of calculating the deferral.

422.204(7) (7) 

422.204(7)(am) (am) In addition to any requirements of form established by the administrator, a deferral agreement shall meet all of the following requirements:

422.204(7)(am)1. 1. The agreement shall be in writing and signed by the customer.

422.204(7)(am)2. 2. The agreement shall incorporate by reference the transaction to which the deferral applies.

422.204(7)(am)3. 3. The agreement shall state each installment or part thereof in the amount to be deferred, the date or dates originally payable and either the date or dates agreed to become payable for the payment of the amounts deferred or the periods of deferral.

422.204(7)(am)4. 4. The agreement shall clearly set forth the dollar amount of the charge for each installment to be deferred and the total dollar amount to be paid by the customer for the deferral.