First Regular Session
Sixty-second General Assembly
LLS NO. 99-0607.01 Julie Hoerner SENATE BILL 99-160
STATE OF COLORADO
BY SENATOR Dyer;
also REPRESENTATIVE Kaufman.
BUSINESS AFFAIRS & LABOR
A BILL FOR AN ACT
101 CONCERNING DEREGULATION OF TRANSACTIONS UNDER THE UNIFORM
102 CONSUMER CREDIT CODE, AND, IN CONNECTION THEREWITH,
103 DEREGULATING RATES, FEES, AND CHARGES PERMITTED FOR CREDIT
104 SALES AND LOANS.
Bill Summary
(Note: This summary applies to this bill as introduced and does
not necessarily reflect any amendments that may be subsequently
adopted.)
Eliminates the $2 or 2-«% limit on cash advance transaction fees
and allows cash advance transaction fees to be established by contract.
Eliminates the $20 return check fee for payments and allows the amount
of the return check fee to be established by contract. Creates a fee for
credit extended to the buyer in excess of a revolving charge account credit
limit to be established by contract.
Permits a delinquency charge on consumer loans, consumer credit
sale, refinancing, and consolidations, including a revolving credit account
to be established by contract. Allows a delinquency charge to be assessed
after 10 days from the due date of the payment on the consumer loan,
refinancing, or consolidation.
Permits the credit service charge for revolving charge accounts to
be established by contract.
Creates a penalty in an amount to be established by contract for the
lender as a penalty for prepayment on a consumer loan, refinancing, or
consolidation, that is secured by an interest in land.
Allows the loan finance charge for supervised loans, including
revolving loan accounts, to be calculated according to an actuarial
method, equivalent to a rate established by contract.
[ ] denotes HOUSE amendment. { } denotes SENATE amendment.
Capital letters indicate new material to be added to existing statute.
Dashes through the words indicate material to be deleted from existing statute.
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Amends the definition of interest to include:
Interest or any amount payable under a point, discount, or
other system of charges;
Premium or other charge for any guarantee or insurance
protecting the lender against the debtor's default or other
credit loss; and
Charges incurred for investing the collateral of the debtor,
for commissions, or brokerage for securing the debt.
States that "interest" does not include:
Additional charges in connection with a consumer credit
sale or a consumer loan;
Delinquency charges for a consumer credit sale or a
consumer loan;
Deferral charges related to a consumer credit sale or
consumer loan;
Similar charges specifically authorized by law; or
Additional interest charges authorized by a commercial
credit plan.
1 Be it enacted by the General Assembly of the State of Colorado:
2 SECTION 1. 5-2-201, Colorado Revised Statutes, is amended BY
3 THE ADDITION OF A NEW SUBSECTION to read:
4 5-2-201. Credit service charge for consumer credit sales other
5 than revolving charge accounts. (2.5) NOTWITHSTANDING SUBSECTION
6 (2) OF THIS SECTION AND SUBJECT TO THE LIMITATIONS OF SECTION
7 5-12-103, ON AND AFTER JULY 1, 1999, THE CREDIT SERVICE CHARGE,
8 CALCULATED ACCORDING TO THE ACTUARIAL METHOD, MAY BE THE
9 EQUIVALENT OF ANY RATE ESTABLISHED BY A CONSUMER CREDIT SALE
10 CONTRACT.
11 SECTION 2. 5-2-202 (1) (e), Colorado Revised Statutes, is
12 amended to read:
13 5-2-202. Additional charges. (1) In addition to the credit service
14 charge permitted by this part 2, a seller may contract for and receive the
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1 following additional charges in connection with a consumer credit sale:
2 (e) The following charges if agreed to by the parties:
3 (I) A charge not to exceed the greater of two dollars or two and
4 one-half percent of the amount advanced, IN AN AMOUNT ESTABLISHED BY
5 CONTRACT for each cash advance transaction made pursuant to a seller
6 credit card; and
7 (II) A fee not to exceed twenty dollars, IN AN AMOUNT
8 ESTABLISHED BY CONTRACT assessed upon return or dishonor of a check
9 or other instrument tendered as payment; AND
10 (III) A FEE IN AN AMOUNT ESTABLISHED BY CONTRACT FOR CREDIT
11 EXTENDED TO THE BUYER IN EXCESS OF THE CREDIT LIMIT ESTABLISHED
12 FOR A REVOLVING CHARGE ACCOUNT.
13 SECTION 3. 5-2-203, Colorado Revised Statutes, is amended BY
14 THE ADDITION OF A NEW SUBSECTION to read:
15 5-2-203. Delinquency charges. (5) NOTWITHSTANDING
16 SUBSECTION (1) OR (4) OF THIS SECTION, ON AND AFTER JULY 1, 1999, WITH
17 RESPECT TO ANY CONSUMER CREDIT SALE, REFINANCING, OR
18 CONSOLIDATION, INCLUDING A REVOLVING CHARGE ACCOUNT, A SELLER
19 MAY CHARGE A DELINQUENCY CHARGE IN AN AMOUNT ESTABLISHED BY
20 CONTRACT ON ANY INSTALLMENT NOT PAID IN FULL WITHIN TEN DAYS OF
21 THE INSTALLMENT'S SCHEDULED DUE DATE.
22 SECTION 4. 5-2-207, Colorado Revised Statutes, is amended BY
23 THE ADDITION OF A NEW SUBSECTION to read:
24 5-2-207. Credit service charge for revolving charge accounts.
25 (6) NOTWITHSTANDING SUBSECTION (3) OF THIS SECTION AND SUBJECT TO
26 THE LIMITATIONS OF SECTION 5-12-103, ON AND AFTER JULY 1, 1999, THE
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1 CHARGE THAT MAY BE MADE IN EACH BILLING CYCLE MAY BE THE
2 EQUIVALENT OF ANY RATE ESTABLISHED BY CONTRACT, APPLIED TO THE
3 AMOUNT DETERMINED PURSUANT TO SUBSECTION (2) OF THIS SECTION.
4 SECTION 5. 5-3-202 (1) (f), Colorado Revised Statutes, is
5 amended to read:
6 5-3-202. Additional charges. (1) In addition to the loan finance
7 charge permitted by this part 2, a lender may contract for and receive the
8 following additional charges in connection with a consumer loan:
9 (f) The following charges if agreed to by the parties:
10 (I) A charge not to exceed the greater of two dollars or two and
11 one-half percent of the amount advanced, IN AN AMOUNT ESTABLISHED BY
12 CONTRACT for each cash advance transaction made pursuant to a lender
13 credit card; and
14 (II) A fee not to exceed twenty dollars, IN AN AMOUNT
15 ESTABLISHED BY CONTRACT assessed upon return or dishonor of a check
16 or other instrument tendered as payment; AND
17 (III) A FEE IN AN AMOUNT ESTABLISHED BY CONTRACT FOR CREDIT
18 EXTENDED TO THE DEBTOR IN EXCESS OF THE CREDIT LIMIT ESTABLISHED
19 FOR A REVOLVING LOAN ACCOUNT.
20 SECTION 6. 5-3-203 (1), Colorado Revised Statutes, is
21 amended, and the said 5-3-203 is further amended BY THE ADDITION
22 OF THE FOLLOWING NEW SUBSECTIONS, to read:
23 5-3-203. Delinquency charges. (1) With respect to a
24 precomputed consumer loan, refinancing, or consolidation, the parties
25 may contract for a delinquency charge on any instalment INSTALLMENT
26 not paid in full within ten days after its scheduled due date in an amount
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1 not exceeding the greater of ESTABLISHED BY CONTRACT.
2 (a) An amount, not exceeding ten dollars, which is five percent of
3 the unpaid amount of the instalment, or
4 (b) The deferral charge (subsection (1) of section 5-3-204) that
5 would be permitted to defer the unpaid amount of the instalment for the
6 period that it is delinquent.
7 (7) NOTWITHSTANDING PARAGRAPHS (a) AND (b) OF SUBSECTION
8 (5) OF THIS SECTION, ON AND AFTER JULY 1, 1999, WITH RESPECT TO A
9 CONSUMER LOAN, REFINANCING, OR CONSOLIDATION THAT IS NOT
10 PRECOMPUTED, INCLUDING A REVOLVING LOAN ACCOUNT, THE LENDER
11 MAY ASSESS A DELINQUENCY CHARGE IN AN AMOUNT ESTABLISHED BY
12 CONTRACT ON ANY INSTALLMENT NOT PAID IN FULL WITHIN TEN DAYS
13 AFTER THE INSTALLMENT'S SCHEDULED DUE DATE.
14 (8) NOTWITHSTANDING SUBSECTION (6) OF THIS SECTION, ON AND
15 AFTER JULY 1, 1999, WITH RESPECT TO A REVOLVING LOAN ACCOUNT FOR
16 WHICH A LENDER CREDIT CARD IS ISSUED AND THAT IS NOT SECURED BY AN
17 INTEREST IN LAND, A LENDER MAY ASSESS A DELINQUENCY CHARGE IN AN
18 AMOUNT ESTABLISHED BY CONTRACT ON ANY MINIMUM PAYMENT DUE IN
19 CONNECTION WITH A BILLING CYCLE THAT REMAINS UNPAID TEN DAYS
20 AFTER SUCH MINIMUM PAYMENT'S SCHEDULED DUE DATE.
21 SECTION 7. 5-3-209, Colorado Revised Statutes, is amended to
22 read:
23 5-3-209. Right to prepay. (1) EXCEPT AS OTHERWISE PROVIDED
24 IN SUBSECTION (2) OF THIS SECTION AND subject to the provisions on
25 rebate upon prepayment (section 5-3-210), the debtor may prepay in full,
26 or in part if payment is no less than five dollars, the unpaid balance of a
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1 consumer loan, refinancing, or consolidation, at any time without penalty.
2 A payment in the amount of a scheduled instalment, other than the last
3 scheduled instalment, not identified by the debtor as a partial prepayment
4 shall not be deemed to be a partial prepayment regardless of when the
5 payment is made if the amount equals the next scheduled instalment. If
6 such a payment is applied by the lender to the scheduled instalment, the
7 payment shall be deemed to have been made on the due date for the
8 scheduled instalment to which it was applied.
9 (2) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
10 SECTION OR IN SECTION 5-3-210, ON AND AFTER JULY 1, 1999, A LENDER
11 MAY CONTRACT FOR AND RECEIVE A FEE OR CHARGE AS A PENALTY FOR
12 PREPAYMENT IN FULL OF THE UNPAID BALANCE OF A CONSUMER LOAN,
13 REFINANCING, OR CONSOLIDATION THAT IS SECURED BY AN INTEREST IN
14 LAND.
15 SECTION 8. 5-3-508, Colorado Revised Statutes, is amended BY
16 THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS to
17 read:
18 5-3-508. Loan finance charge for supervised loans.
19 (2.5) NOTWITHSTANDING SUBSECTION (2) OF THIS SECTION AND SUBJECT
20 TO THE LIMITATIONS OF SECTION 5-12-103, ON AND AFTER JULY 1, 1999,
21 THE LOAN FINANCE CHARGE, CALCULATED ACCORDING TO THE ACTUARIAL
22 METHOD, MAY BE THE EQUIVALENT OF ANY RATE ESTABLISHED BY
23 CONTRACT FOR A SUPERVISED CONSUMER LOAN, OTHER THAN A LOAN
24 ESTABLISHED BY A REVOLVING LOAN CONTRACT.
25 (3.5) NOTWITHSTANDING SUBSECTION (3) OF THIS SECTION AND
26 SUBJECT TO THE LIMITATIONS OF SECTION 5-12-103, ON AND AFTER JULY
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1 1, 1999, THE LOAN FINANCE CHARGE FOR A LOAN PURSUANT TO A
2 REVOLVING LOAN ACCOUNT, CALCULATED ACCORDING TO AN ACTUARIAL
3 METHOD, MAY BE THE EQUIVALENT OF ANY RATE ESTABLISHED BY
4 CONTRACT APPLIED TO THE UNPAID BALANCE OF THE PRINCIPAL.
5 (3.6) NOTWITHSTANDING ANYTHING TO THE CONTRARY
6 CONTAINED IN THIS SECTION, ON AND AFTER JULY 1, 1999, FOR A
7 REVOLVING LOAN ACCOUNT SECURED BY AN INTEREST IN LAND FOR WHICH
8 THE LIMIT IN THE AMOUNT OF CREDIT MADE AVAILABLE TO THE DEBTOR IS
9 THE PRINCIPAL UNDER SECTION 5-3-510 (2), A LENDER MAY CONTRACT FOR
10 AND RECEIVE FINANCE CHARGES TO OPEN, USE, OR MAINTAIN THE
11 REVOLVING ACCOUNT, AS A FIXED AMOUNT, AS A PERCENTAGE OF THE
12 CREDIT LIMIT, OR ON ANY OTHER BASIS ESTABLISHED BY CONTRACT, IN
13 ADDITION TO FINANCE CHARGES AT A PERIODIC RATE OR RATES. FINANCE
14 CHARGES TO OPEN, USE, OR MAINTAIN A REVOLVING LOAN ACCOUNT SHALL
15 NOT BE SUBJECT TO THE RATE LIMITATIONS OF SUBSECTION (3) OR (3.5) OF
16 THIS SECTION, BUT SHALL BE IN ADDITION THERETO.
17 SECTION 9. 5-12-103 (1) and (2), Colorado Revised Statutes,
18 are amended to read:
19 5-12-103. Greater rate may be stipulated. (1) The parties to
20 any bond, bill, promissory note, or other instrument of writing may
21 stipulate therein for the payment of a greater or higher rate of interest than
22 eight percent per annum, but not exceeding forty-five percent per annum,
23 and any such stipulation may be enforced in any court of competent
24 jurisdiction in the state. except as otherwise provided in articles 1 to 6 of
25 this title. The rate of interest shall be deemed to be excessive of the limit
26 under this section only if it could have been determined at the time of the
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1 stipulation by mathematical computation that such rate would exceed an
2 annual rate of forty-five percent when the rate of interest was calculated
3 on the unpaid balances of the debt on the assumption that the debt is to be
4 paid according to its terms and will not be paid before the end of the
5 agreed term.
6 (2) (a) The term "interest" as used in this section means the sum
7 of all charges payable directly or indirectly by a debtor and imposed
8 directly or indirectly by a lender as an incident to or as a condition of the
9 extension of credit to the debtor, whether paid or payable by the debtor,
10 the lender, or any other person on behalf of the debtor to the lender or to
11 a third party, INCLUDING ANY OF THE FOLLOWING TYPES OF CHARGES THAT
12 ARE APPLICABLE:
13 (I) INTEREST OR ANY AMOUNT PAYABLE UNDER A POINT,
14 DISCOUNT, OR OTHER SYSTEM OF CHARGES;
15 (II) PREMIUM OR OTHER CHARGE FOR ANY GUARANTEE OR
16 INSURANCE PROTECTING THE LENDER AGAINST THE DEBTOR'S DEFAULT OR
17 OTHER CREDIT LOSS; AND
18 (III) CHARGES INCURRED FOR INVESTIGATING THE COLLATERAL OR
19 THE CREDIT WORTHINESS OF THE DEBTOR, OR FOR COMMISSIONS, OR
20 BROKERAGE FOR OBTAINING THE CREDIT.
21 (b) FOR THE PURPOSES OF DETERMINING COMPLIANCE WITH THE
22 MAXIMUM RATE LIMITATION CONTAINED IN SUBSECTION (1) OF THIS
23 SECTION, THE TERM "INTEREST" DOES NOT INCLUDE:
24 (I) ADDITIONAL CHARGES, AS DEFINED IN SECTION 5-2-202 OR
25 5-3-202;
26 (II) DELINQUENCY CHARGES, AS DEFINED IN SECTION 5-2-203 OR
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1 5-3-203;
2 (III) DEFERRAL CHARGES, AS DEFINED IN SECTION 5-2-204 OR
3 5-3-204;
4 (IV) SIMILAR CHARGES SPECIFICALLY AUTHORIZED BY LAW; OR
5 (V) ADDITIONAL INTEREST CHARGES AUTHORIZED IN SECTION
6 5-12-107 (3).
7 (c) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
8 SUBSECTION (1) OF THIS SECTION, THIS SECTION DOES NOT LIMIT THE
9 ASSESSMENT OF FINANCE CHARGES SET FORTH UNDER SECTION 5-3-508
10 (3.6), OR ANY OTHER CHARGES OR FEES AUTHORIZED IN ARTICLE 1 OR 6 OF
11 THIS TITLE, IN ADDITION TO THE INTEREST CHARGES PERMITTED BY
12 SUBSECTION (1) OF THIS SECTION.
13 (d) NOTWITHSTANDING ALL FEES AND CHARGES NOT SUBJECT TO
14 THE MAXIMUM RATE LIMITATION IN SUBSECTION (1) OF THIS SECTION, ALL
15 OF THE FEES AND CHARGES SET FORTH UNDER SUBPARAGRAPHS (b) AND
16 OF THIS SUBSECTION (1), AND ALL OTHER AMOUNTS PERMITTED TO BE
17 CHARGED UNDER THIS ARTICLE, ARE INTEREST AND ARE DEEMED TO BE
18 MATERIAL TO THE DETERMINATION OF THE INTEREST RATE APPLICABLE TO
19 AN EXTENSION OF CREDIT FOR PURPOSES OF 12 U.S.C. SEC. 85 OF "THE
20 NATIONAL BANK ACT" AND 12 U.S.C. SEC. 1831d OF THE "DEPOSITORY
21 INSTITUTION DEREGULATION AND MONETARY CONTROL ACT OF 1980".
22 SECTION 10. Effective date. This act shall take effect July 1,
23 1999.
24 SECTION 11. Safety clause. The general assembly hereby
25 finds, determines, and declares that this act is necessary for the immediate
26 preservation of the public peace, health, and safety.