§412:9-305  Open-end consumer loans. 
(a)  Open-end consumer loans made under the authority of this article shall be
subject to the following special restrictions:



(1)  A financial services loan company shall not
compound interest on any open-end consumer loan by adding any unpaid interest
to the unpaid principal balance of the open-end loan.  However, the unpaid
principal balance may include charges other than interest and late charges;



(2)  Regardless of the interest computation method
used in each billing cycle under an open-end loan agreement, the unpaid
principal balance of any day shall be determined by adding to any balance
unpaid as of the beginning of that day all advances and other permissible
amounts (other than interest) charged to the borrower, and deducting all
payments and other credits made or received that day;



(3)  If credit life insurance or credit disability
insurance is provided, the additional charge for the insurance shall be
calculated in each billing cycle by applying the current monthly premium rate
(which may be calculated daily), as approved by the insurance commissioner, to
the entire outstanding balances, or to as much of the outstanding balances that
the insurance covers, using the same method used for the calculation of loan interest. 
A financial services loan company shall not be obligated to advance to the
insurer any premiums for the insurance on a borrower who is delinquent in
making the required minimum payments on the loan if one or more of the payments
is past due for ninety days or more.  However, the financial services loan
company shall advance to the insurer the amounts required to keep the insurance
in force during the ninety-day period.  The advanced amounts may be debited to
the borrower's open-end account; and



(4)  A financial services loan company may retain any
security interest in real or personal property securing the open-end loan until
the open-end loan is terminated.



(b)  A financial services loan company may
impose charges on an open-end consumer loan for:



(1)  Participation in an open-end loan account,
whether assessed on an annual, periodic, or other basis; and



(2)  Payment of items that overdraw an open-end loan
account. [L 1993, c 350, pt of §1; am L 1995, c 45, §1]