16a-2-506.   (UCCC) Advances to perform covenants of consumer.(1) If the agreement with respect to a consumer credit transactioncontains covenants by the consumer to perform certain duties pertaining toinsuring or preserving collateral and the creditor pursuant to theagreement pays for performance of the duties on behalf of the consumer, hemay, after giving prior notification and giving the buyer reasonableopportunity to perform, add the amounts paid to the debt. Within areasonable time after advancing any sums, he shall state to the buyer inwriting the amount of the sums advanced, any charges with respect to thisamount, and any revised payment schedule and, if the duties of the consumerperformed by the creditor pertain to insurance, a brief description of theinsurance paid for by the creditor including the type and amount ofcoverages. No further information need be given.

      (2)   A finance charge may be made for sums advanced pursuant tosubsection (1) at a rate not exceeding the rate stated to the consumerpursuant to law in a disclosure statement, except that with respect to openend credit the amount of the advance may be added to the unpaid balance ofthe debt and the creditor may make a finance charge not exceeding thatpermitted by the appropriate provisions on finance charge for consumercredit sales pursuant to open end credit (section 16a-2-202) or forconsumer loans (subsection (1) or (2) of section 16a-2-401), whichever isappropriate.

      History:   L. 1973, ch. 85, § 34; Jan. 1, 1974.