The unearned portion of the precomputed finance charge on consumer credit transactions repayable in substantially equal successive installments at approximately equal intervals shall be equal to at least that portion of the finance charge which the sums of the installment balances of the obligation scheduled to be outstanding after the installment date nearest the date of prepayment bears to the sum of all installment balances originally scheduled to be outstanding under the obligation. For the purpose of determining the installment date nearest the date of prepayment when payments are monthly, any prepayment made on or before the 15th day following an installment due date shall be deemed to have been made as of the installment due date, and if prepayment occurs on or after the 16th day it shall be deemed to have been made on the succeeding installment due date. This method of calculating rebates may be referred to as the “rule of 78" or “sum of the digits" method. This paragraph applies to all of the following:
Consumer credit transactions entered into before November 1, 1981.
Consumer credit transactions having initial terms of less than 49 months entered into on or after November 1, 1981 and before August 1, 1987.
Consumer credit transactions in which the amount financed is less than $5,000, which have initial terms of less than 37 months and which are entered into on or after August 1, 1987.
The unearned portion of the finance charge on consumer credit transactions described in par. (c)
is, at the option of the creditor, either of the following:
The portion of the finance charge which is allocable to all unexpired payment periods as scheduled or deferred. A payment period is unexpired if prepayment is made within 15 days after the payment's due date. The unearned finance charge is the finance charge which, assuming all payments are made as scheduled or deferred, would be earned for each unexpired payment period by applying to unpaid balances of principal, according to the actuarial method, the annual percentage rate disclosed to the customer under subch. III
. The creditor may decrease the annual interest rate to the next multiple of 0.25 percent.
The finance charge less the amount determined by applying the annual percentage rate disclosed to the customer under subch. III
, according to the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.
Consumer credit transactions which have terms of 49 months or more and which are entered into after November 1, 1981 and before August 1, 1987.
Consumer credit transactions in which the amount financed is $5,000 or more and which are entered into on or after August 1, 1987.
Consumer credit transactions in which the amount financed is less than $5,000, which have initial terms of 37 months or more and which are entered into on or after August 1, 1987.
With respect to other precomputed consumer credit transactions, the administrator may prescribe by rule the refund formula consistent with sub. (2) (a)
taking into account the irregularity of installment amounts and due dates.
Except as provided in par. (b)
, the unearned portion of a deferral charge is the deferral charge multiplied by the number of unexpired payment periods as of the date of prepayment and divided by the total number of installments deferred.
If the unearned finance charge is calculated under sub. (2) (b)
, the deferral charge shall be refunded in full.
This section does not preclude the collection or retention by the creditor of delinquency charges under s. 422.203
for delinquencies or payments due prior to prepayment.
If the maturity of the obligation is accelerated for any reason and judgment is obtained, the customer is entitled to the same rebate as if payment in full had been made on the date judgment is entered against the customer.
For purpose of this section, the finance charge in a manufactured home transaction as defined in s. 138.056 (1) (bg)
does not include fees, discounts, or other sums actually imposed by the government national mortgage association, the federal national mortgage association, the federal home loan mortgage corporation or other governmentally sponsored secondary mortgage market purchaser of the loan or any private secondary mortgage market purchaser of the loan who is not a person related to the original lender.
Agricultural credit transactions. 422.210(1)(1)
Permissible finance charges and fees.
With respect to a credit transaction that it is primarily for an agricultural purpose, a creditor may not charge, collect or receive any finance charge or fee unless the charge or fee is clearly disclosed in writing to the customer and that is agreed to by the creditor and the customer.
History: 1997 a. 302
DISCLOSURE AND FORM OF WRITINGS
Requirements of federal act.
In addition to the disclosures required by the federal consumer credit protection act, if any, the creditor shall disclose to the customer to whom credit is extended the information required by this subchapter. With respect to every consumer credit sale payable in installments (s. 421.301 (30)
) upon which no separate finance charge is stated or imposed (s. 421.301 (20)
) the creditor shall make disclosures in accordance with the federal consumer credit protection act, to the extent applicable, whether or not such act requires such disclosures to be made.
History: 1971 c. 239
; 1979 c. 10
The functions of disclosure regulation in consumer transactions. Whitford, 1973 WLR 400.
General requirements and provisions. 422.302(1)(1)
The information required by this subchapter to be disclosed by the creditor to the customer to whom credit is extended:
Except as provided in s. 422.303
and in rules adopted by the administrator, need not be contained in a single writing or made in the order set forth in chs. 421
May be supplemented by additional information or explanations supplied by the creditor, but none shall be stated, utilized or placed so as to mislead or confuse the customer or contradict, obscure or detract attention from the information required by this subchapter to be disclosed; and so long as the additional information or explanations do not have the effect of circumventing, evading or unduly complicating the information required to be disclosed by this subchapter; and
Need be made only to the extent applicable and only as to those items for which the creditor makes a separate charge to the customer.
The creditor shall disclose all information required by this subchapter before the transaction is consummated; such disclosures may be made on the face of the writing evidencing the transaction.
Before any payment is due, the creditor shall furnish the customer with an exact copy of each instrument, document, agreement and contract which is signed by the customer and which evidences the customer's obligation. If there is more than one customer, delivery of copies of the documents to one of them constitutes compliance with this subsection.
Anything to the contrary in chs. 421
notwithstanding, the sale of insurance under ch. 424
shall not be considered a sale requiring separate disclosure other than as provided in s. 422.202 (1)
History: 1971 c. 239
; 1979 c. 10
When a merchant first informed the customer of 24 percent interest to be charged on an open account in statements of the account provided after the account was opened, sub. (2) and s. 422.308 were violated and the merchant was only entitled to interest under s. 138.04. Severson Agri-Service, Inc. v. Lander, 172 Wis. 2d 269
, 493 N.W.2d 230
(Ct. App. 1992).
Form requirements other than open-end or discount. 422.303(1)(1)
In a consumer credit sale other than one pursuant to an open-end credit plan or a credit sale in which the only finance charge is a prompt payment discount as described in s. 422.201 (8)
, the customer's obligation to pay the total of payments shall be evidenced by a single instrument, which shall include, in addition to the other disclosures required by this subchapter, the signature of the seller, the signature of the customer, the date on which it was signed and a description of any property the customer transfers to the seller as a trade-in.
The terms of such instrument evidencing a consumer credit sale shall be set forth in not less than 8-point standard type, or such similar type as is prescribed in rules adopted by the administrator, to the extent that larger type is not specifically required by chs. 421
Except as provided in sub. (4)
, every writing evidencing the customer's obligation to pay under a consumer credit transaction other than one pursuant to an open-end credit plan or a motor vehicle consumer lease, shall contain immediately above or adjacent to the place for the signature of the customer, a clear, conspicuous, printed or typewritten notice in substantially the following language:
NOTICE TO CUSTOMER
(a) DO NOT SIGN THIS BEFORE YOU READ THE WRITING ON THE REVERSE SIDE, EVEN IF OTHERWISE ADVISED.
(b) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.
(c) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN.
(d) YOU HAVE THE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THIS AGREEMENT AND YOU MAY BE ENTITLED TO A PARTIAL REFUND OF THE FINANCE CHARGE.
The notice described in sub. (3) (a)
is not required when no terms appear on the reverse side of the writing. The notice described in sub. (3) (d)
is not required with respect to a consumer credit transaction secured by a first lien mortgage or equivalent security interest on real property, the original term of which is 10 years or more.
The creditor shall retain a copy of such writing evidencing a consumer credit transaction, other than one pursuant to an open-end credit plan, and of any proposal for a consumer credit transaction which the merchant has required or requested the customer to sign and which the customer has signed during contract negotiations, for a period of one year after the last payment scheduled under the transaction, or one year after the transaction has been repaid in full, whichever is sooner. The creditor shall supply the customer with copies of such documents upon any demand of the customer made within such period; one copy shall be furnished at no charge; and subsequent copies shall be furnished on the condition that the customer pay the creditor's reasonable costs of preparing and forwarding the copy. Copies supplied under this subsection are in addition to those copies required by s. 422.302
Legislative Council Note, 1973: Makes clear that this section refers to copies of documents given subsequently to documents furnished in the original transaction. Section 422.302 (3) requires that a copy of each document signed by the customer and evidencing his obligation be given to the customer before the first payment is due. This section is intended to refer to additional copies of such documents, furnished to the customer during the course of repaying the obligation. The added language inserted in sub. (5) further clarifies this intent. [Bill 432-A]
Prohibition of blank writings. 422.304(1)(1)
Every writing evidencing a consumer credit transaction shall be completed as to all essential provisions prior to the signing thereof by the parties, and no creditor shall induce, encourage or otherwise permit the customer to sign a writing containing blank spaces which are to be filled in after it is signed except for a space provided for the identifying numbers of goods if not available at the time of the transaction. Blanks relating to price, charges or terms of payment which are inapplicable to a transaction must be filled in a manner which reveals their inapplicability unless their inapplicability is clearly and conspicuously indicated.
History: 1971 c. 239
See also s. DFI-WCA 1.34
, Wis. adm. code.
Notice to obligors. 422.305(1)(1)
No natural person is obligated to assume personal liability for payment of an obligation arising out of a consumer credit transaction unless the person, in addition to signing the writing evidencing the consumer credit transaction, or a separate guaranty or similar instrument, also either receives a copy of each instrument, document, agreement and contract which is signed by the customer and which evidences the customer's obligation to pay, or signs and receives at the time of signing a separate instrument in substantially the following language:
(a) You have agreed to pay the total of payments under a consumer credit transaction between .... (name of customer) and .... (name of merchant) made on .... (date of transaction) for .... (description of purpose of credit, i.e. sale or loan) in the amount of $.....
(b) You will be liable and fully responsible for payment of the above amount even though you may not be entitled to any of the goods, services or loan furnished thereunder.
(c) You may be sued in court for the payment of the amount due under this consumer credit transaction even though the customer named above may be working or have funds to pay the amount due.
(d) This explanation is not the agreement under which you are obligated, and the guaranty or agreement you have executed must be consulted for the exact terms of your obligations.
(e) You are entitled now, or at any time, to one free copy of any document you sign evidencing this transaction.
(f) The undersigned acknowledges receipt of an exact copy of this notice.
The notice must be printed, typed or otherwise reproduced in a size and style equal to at least 10-point boldface type or such similar type as prescribed by the administrator, and shall contain only the matter above set forth and the address of the merchant.
This notice shall not be required to be given to a merchant who endorses or is otherwise liable for payment to an assignee or holder of the customer's obligation.
The notice required by this section shall not act to increase or decrease the liability of a cosigner.
Taking or arranging for a person to sign an instrument in violation of this section is a violation subject to s. 425.304
History: 1971 c. 239
; 1973 c. 3
; 1979 c. 10
See also s. DFI-WCA 1.351
, Wis. adm. code.
Receipts; accounting; evidence of payment. 422.306(1)(1)
The creditor shall furnish the customer, without request, a written receipt for each payment made in cash, or any other time the method of payment does not itself provide evidence of payment.
At any time after consummation of a consumer credit transaction other than one pursuant to an open-end credit plan, the creditor, upon written request by the customer, shall furnish to the customer a written statement of the amounts and specifying the dates of payments received and charges imposed, together with the unpaid balance at the time of the statement. With respect to transactions secured by a first lien mortgage, or equivalent security interest, on real property such statement need specify only the dates and amounts of payments received and charges imposed during the previous 12 months, and the unpaid balance remaining at the time of the statement. The customer shall be entitled to one such statement free of charge once every 12 months. Additional statements shall be furnished if the customer pays the creditor's reasonable costs of preparing and furnishing the statement.
With respect to an open-end credit plan, the creditor shall at any time upon written request by the customer, furnish to the customer a written statement, which may consist of copies of the periodic statements furnished to the customer under the plan, specifying the dates and amounts of purchases or loan credit extended and payments received during the previous 12 months, and the unpaid balance remaining at the time of the statement. The customer shall be entitled to one such statement at a charge not in excess of $1 once every 12 months. Additional statements shall be furnished if the customer pays the creditor's reasonable costs of preparing and furnishing the statement.
Except as provided in s. 708.15
, within 45 days after payment by the customer of all sums for which the customer is obligated under a consumer credit transaction other than one pursuant to an open-end credit plan, the creditor shall give or forward to the customer instruments which acknowledge payment in full, and release of any security interest when there is no outstanding secured obligation, and furnish to the customer or the customer's designee evidence of the release or assignment to such designee of any recorded lien on real estate and termination of any filed financing statement which perfected such security interest.
See also s. DFI-WCA 1.36
, Wis. adm. code.
Estimates or approximations.
If at the time disclosures must be made, an amount or other item of information required to be disclosed or needed to determine a required disclosure is unknown or not available to the creditor, and a reasonable effort has been made to ascertain it, the creditor may use an estimated amount or approximation of the information, if:
The estimate or approximation is clearly identified as such, is reasonable and is based on the best information available to the creditor; and
The estimate or approximation is not used for the purpose of circumventing or evading the disclosure requirements of this subchapter.
History: 1971 c. 239