House Bill No. 6576
               House Bill No. 6576

               PUBLIC ACT NO. 97-13


AN ACT CONCERNING SMALL LOAN LENDERS.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Section  36a-555  of  the general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    No  person  shall  engage  in  the business of
making loans of money or credit in the  amount  or
to the value of [five] FIFTEEN thousand dollars or
less for loans made under section 36a-563, [or ten
thousand  dollars or less for loans made under] AS
AMENDED BY SECTION  2  OF  THIS  ACT,  OR  section
36a-565,  and  charge,  contract  for or receive a
greater rate of interest, charge or  consideration
than  twelve per cent per annum therefor, except a
bank, an out-of-state bank, a  Connecticut  credit
union,  a  federal  credit  union, an out-of-state
credit  union,  a  savings  and  loan  association
wholly  owned  subsidiary  service  corporation, a
person to the extent that such person makes  loans
for   agricultural,   commercial,   industrial  or
governmental use  or  extends  credit  through  an
open-end  credit  plan,  as defined in subdivision
(8) of section 36a-676, for the retail purchase of
consumer   goods   or   services,  or  a  licensed
pawnbroker,  unless  licensed  to  do  so  by  the
commissioner  as  provided  in sections 36a-555 to
36a-573, inclusive, AS AMENDED BY THIS ACT.
    Sec.   2.   Section  36a-563  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    (a)  Every  licensee  under sections 36-555 to
36a-573, inclusive, AS AMENDED BY  THIS  ACT,  may
loan any sum of money not exceeding [five] FIFTEEN
thousand  dollars,  excluding  charges,  and   may
charge,  contract  for and receive thereon charges
at a rate not to exceed the following: (1) On  any
loan  which  does  not  exceed  one thousand eight
hundred dollars,  excluding  charges,  or  on  any
unsecured  loan  or  on  any  loan secured only by
credit life insurance, seventeen dollars  per  one
hundred  dollars on that part of the cash advance,
not exceeding  six  hundred  dollars,  and  eleven
dollars  per  one hundred dollars on any remainder
when the loan is made payable over a period of one
year,  and  proportionately  at those rates over a
longer or shorter term of  loan;  (2)  on  a  loan
which  exceeds one thousand eight hundred dollars,
excluding  charges,  and  which  is   secured   by
property  other than credit life insurance, eleven
dollars per one hundred dollars on the entire cash
advance  when  the  loan  is  made  payable over a
period of one year, and  proportionately  at  that
rate  over  a longer or shorter term of loan. Such
charges shall be computed at the time the loan  is
made  on  the  full amount of the cash advance for
the   full   term   of    the    loan    contract,
notwithstanding any agreement to repay the loan in
instalments. Such charges shall be  added  to  the
cash  advance and the resulting sum may become the
face amount of the  note.  All  payments  made  on
account  of  any  loan,  except  those  applied to
default and deferment charges, shall be deemed  to
be  applied to the unpaid instalments in the order
in which they are due.
    (b)  For  the purpose of computations, whether
at the maximum rate or less, a month shall be that
period  of  time from any date in one month to the
corresponding date in the next month, but if there
is  no  such  corresponding date, then to the last
day  of  the  next  month,  and  a  day  shall  be
considered  one-thirtieth  of  a  month  when such
computation is made for a fraction of a month. For
loans  originally  scheduled  to  be repaid over a
period of forty-eight months and fifteen  days  or
less, the portion of the charges applicable to any
particular   monthly   instalment    period,    as
originally  scheduled  or  following  a deferment,
shall bear the same ratio to  the  total  charges,
excluding any adjustment made under subsection (c)
of this section, as the balance  scheduled  to  be
outstanding  during  that  monthly period bears to
the sum of  all  the  monthly  balances  scheduled
originally  by  the  contract  of  loan. For loans
originally scheduled to be repaid over a period in
excess of forty-eight months and fifteen days, the
portion  of  the   charges   applicable   to   any
particular    monthly    instalment   period,   as
originally scheduled  or  following  a  deferment,
shall  be  the charges which would be incurred for
that  monthly  instalment  period  if  the  annual
percentage rate disclosed to the borrower pursuant
to [the Connecticut Truth-In-Lending Act] SECTIONS
36a-675  TO  36a-685,  INCLUSIVE, were charged, by
the actuarial  method,  on  the  disclosed  amount
financed  and  all payments were made according to
schedule.
    (c)   Notwithstanding   the   requirement   in
subsection (a), a borrower and licensee may  agree
that the first instalment due date may be not more
than fifteen days more than  one  month,  and  the
charge  for  each day in excess of one month shall
be one-thirtieth of the  portion  of  the  charges
applicable  to  a  first  instalment period of one
month. The charges for the  extra  days  shall  be
added  to  the  first  instalment,  but  shall  be
excluded  in  computing  deferment   charges   and
refunds.  When  a loan contract provides for extra
days  in  a  first  instalment  period,  for   the
purposes   of   sections   36a-555   to   36a-573,
inclusive, AS AMENDED BY THIS ACT, such extra days
shall  be  treated  as the first days in the first
instalment  period  and  the  due  dates  of   the
remaining instalments shall be calculated from the
due date of such first instalment.
    (d)  If  any instalment remains unpaid for ten
or more consecutive days,  including  Sundays  and
holidays, after it is due, the licensee may charge
and collect a default  charge  not  exceeding  the
lesser  of  seven  dollars and fifty cents or five
cents per dollar, or  fraction  thereof,  of  such
scheduled  instalment,  except  a  minimum default
charge  of  three  dollars  may  be  charged   and
collected.  Default  charges may be collected when
due or at any time  thereafter,  but  may  not  be
accumulated until the last payment date.
    (e)  If,  as  of  an  instalment due date, the
payment date of all wholly unpaid  instalments  is
deferred  one or more full months and the maturity
of the contract is extended  for  a  corresponding
period,  the  licensee  may  charge  and collect a
deferment  charge   not   exceeding   the   charge
applicable   to   the  first  of  the  instalments
deferred, multiplied by the number  of  months  in
the deferment period. The deferment period is that
period during which no payment is made or required
by  reason  of  such  deferment,  except  that  no
deferment made pursuant to this  subsection  shall
extend  the  maturity  of  any contract made under
sections 36a-555 to 36a-573, inclusive, AS AMENDED
BY  THIS  ACT, for more than (1) three months, for
loans originally repayable in  twenty-four  months
or  less,  (2)  five  months, for loans originally
repayable in more than twenty-four months but  not
more   than  forty-eight  months,  and  (3)  eight
months, for loans  originally  repayable  in  more
than  forty-eight months. The deferment charge may
be collected at the time of deferment  or  at  any
time   thereafter.  The  portion  of  the  charges
contracted for under subsection (a) applicable  to
each   deferred   balance  and  instalment  period
following the deferment period  shall  remain  the
same as that applicable to such balance and period
under the original contract of loan. No instalment
on  which  a default charge has been collected, or
on account of which any partial payment  has  been
made,   shall  be  deferred  or  included  in  the
computation of the deferment  charge  unless  such
default  charge  or partial payment is refunded to
the borrower or credited to the deferment  charge.
Any  payment received at the time of deferment may
be applied first to the deferment charge  and  the
remainder,  if  any, applied to the unpaid balance
of the contract, but if such payment is sufficient
to  pay,  in addition to the appropriate deferment
charge, any instalment which is in default and the
applicable  default  charge,  it shall be first so
applied and  any  such  instalment  shall  not  be
deferred  or subject to the deferment charge. If a
loan is  prepaid  in  full  during  the  deferment
period, the borrower shall receive, in addition to
the refund required under subsection (f)  of  this
section, a refund of that portion of the deferment
charge applicable to any unexpired full  month  or
months of such deferment period.
    (f)  If  the  contract  of  loan is prepaid in
full by cash, a new loan or otherwise, before  the
final  instalment date, the portion of the charges
applicable to  the  full  instalment  periods,  as
scheduled  originally  in  the loan contract or as
rescheduled  by  reason  of  any  deferment   made
pursuant   to   sections   36a-555   to   36a-573,
inclusive, AS AMENDED BY THIS ACT,  following  the
date  of  prepayment shall be refunded or credited
to the borrower. Where prepayment occurs on  other
than  a  monthly  instalment due date, it shall be
deemed  to  have  occurred  on  the  preceding  or
succeeding instalment due date nearest to the date
of prepayment. Where prepayment occurs on  a  date
midpoint  between  the  preceding  and  succeeding
monthly instalment due dates, it shall  be  deemed
to  have  occurred  on  the  preceding monthly due
date. In all cases where prepayment occurs  before
the first monthly instalment due date, it shall be
deemed to  have  occurred  on  the  first  monthly
instalment  due  date.  If  judgment  is  obtained
before the final  instalment  date,  the  judgment
shall  reflect  the refund which would be required
for prepayment in full as of the date judgment  is
obtained.  No refund of less than one dollar [need
be made; no refund]  OR  for  partial  prepayments
need be made.
    (g)  If part or all of the consideration for a
loan contract is  the  unpaid  balance,  excluding
default  charges,  of  a  prior loan with the same
licensee, the cash advance  under  such  new  loan
contract  may  include  the  balance  of the prior
contract which remains after giving  the  required
refund.
    (h)  In  addition  to the charges provided for
by sections  36a-555  to  36a-573,  inclusive,  AS
AMENDED BY THIS ACT, no further or other charge or
amount for any  examination,  service,  brokerage,
commission  or other thing, or otherwise, shall be
directly or indirectly charged, contracted for  or
received.  If  interest  or  any  other charges in
excess of those permitted  by  said  sections  are
charged, contracted for or received, except as the
result of a bona fide error, the contract of  loan
shall be void and the licensee shall have no right
to collect or receive any principal,  interest  or
charges.  No  person  shall  owe  any licensee, as
such,  at  any  time  more  than  [five]   FIFTEEN
thousand  dollars  for  principal  as  a borrower,
comaker or guarantor for  loans  made  under  said
sections.  No  licensee shall induce or permit any
borrower or borrowers to split or divide any  loan
or  loans  made under said sections, or permit any
borrower  to   become   obligated,   directly   or
indirectly,  under  more than one contract of loan
under said sections at the same time primarily for
the  purpose  of obtaining a higher rate of charge
than  would  otherwise  be   permitted   by   said
sections.  No  contract  made under said sections,
except as deferred in accordance  with  subsection
(e)  of  this section, shall provide for a greater
rate of interest than twelve per cent per annum on
the  balance  remaining  unpaid twenty-four months
and fifteen days after the  date  of  making  such
contract  if  the  original  cash  advance was one
thousand dollars or less or thirty-six months  and
fifteen  days  if the original cash advance was in
excess of one thousand dollars but not  in  excess
of one thousand eight hundred dollars. No contract
made under said sections  with  an  original  cash
advance  in  excess  of one thousand eight hundred
dollars, except as  deferred  in  accordance  with
subsection  (e) of this section, shall provide for
a greater rate of interest than  twelve  per  cent
per  annum  on the balance remaining unpaid on the
scheduled maturity date of said contract. No  part
of  the  principal  balance  remaining unpaid by a
borrower twenty-four months and fifteen days after
making  such  contract  where  the  original  cash
advance  was  one  thousand  dollars  or  less  or
thirty-six  months  and  fifteen  days  where  the
original  cash  advance  was  in  excess  of   one
thousand dollars but not in excess of one thousand
eight   hundred   dollars,   shall   directly   or
indirectly  be renewed or refinanced by the lender
who made such loan. If the maturity date of a loan
made  under  said  sections  has  been extended by
deferred payments, the maximum renewal period that
such  loan  may be extended shall be the number of
months such loan is deferred. When a  contract  is
renewed  or refinanced prior to twenty-four months
and fifteen days where the original  cash  advance
was  one  thousand  dollars  or less or thirty-six
months and fifteen days where  the  original  cash
advance  exceeded one thousand dollars but did not
exceed one thousand eight  hundred  dollars,  from
the  date of making such contract, such renewal or
refinancing  shall,  for  the  purposes  of   this
section, be deemed a separate loan transaction.
    (i)    Notwithstanding   the   provisions   of
subsection  (a)  of  this  section,  on  any  loan
secured by real property a licensee may include in
the amount  of  the  loan  the  following  closing
costs,   provided   such   costs  are  bona  fide,
reasonable in amount  and  not  assessed  for  the
purpose of circumventing or otherwise limiting any
applicable  provision  of  sections   36a-555   to
36a-573,  inclusive,  AS  AMENDED BY THIS ACT: (1)
Fees or premiums for title  examination,  abstract
of  title,  title  insurance,  surveys, or similar
purposes; (2) appraisals, if made by a person  who
is   not   an  employee  or  affiliated  with  the
licensee, and (3) fees and taxes  paid  to  public
officials  for  the  recording  and release of any
document related to the real  estate  security.  A
licensee  may  collect costs incurred in the event
of  foreclosure  which  shall  not   include   any
attorney's fee.
    (j)  No agreement with respect to a loan under
sections 36a-555 to 36a-573, inclusive, AS AMENDED
BY  THIS  ACT,  may  provide for charges resulting
from default by the  borrower,  other  than  those
authorized by said sections.
    Sec.   3.   Section  36a-573  of  the  general
statutes  is  repealed  and   the   following   is
substituted in lieu thereof:
    No   person,   except  as  authorized  by  the
provisions  of  sections   36a-555   to   36a-573,
inclusive, AS AMENDED BY THIS ACT, shall, directly
or indirectly, charge, contract for or receive any
interest,  charge  or  consideration  greater than
twelve per cent per annum upon the  loan,  use  or
forbearance  of  money  or credit of the amount or
value of (1) five thousand dollars or less FOR ANY
SUCH TRANSACTION ENTERED INTO BEFORE THE EFFECTIVE
DATE OF THIS ACT, AND (2) FIFTEEN THOUSAND DOLLARS
OR  LESS  FOR ANY SUCH TRANSACTION ENTERED INTO ON
AND AFTER THE EFFECTIVE  DATE  OF  THIS  ACT.  The
provisions  of  this  section  shall  apply to any
person who, as security for any such loan, use  or
forbearance  of money or credit, makes a pretended
purchase of property from any person  and  permits
the  owner  or  pledgor  to  retain the possession
thereof, or who, by  any  device  or  pretense  of
charging  for  the person's services or otherwise,
seeks to obtain a greater compensation than twelve
per  cent  per  annum. No loan for which a greater
rate of interest or charge than is allowed by  the
provisions   of   sections   36a-555  to  36a-573,
inclusive,  AS  AMENDED  BY  THIS  ACT,  has  been
contracted  for  or received, wherever made, shall
be enforced in this state, and any person  in  any
way  participating  therein in this state shall be
subject  to  the  provisions  of  said   sections,
provided, a loan lawfully made after June 5, 1986,
in compliance with a validly enacted licensed loan
law of another state to a borrower who was not, at
the time of the making of such loan, a resident of
Connecticut  but  who  has  become  a  resident of
Connecticut, may be acquired by a licensee and its
interest provision shall be enforced in accordance
with its terms.

Approved April 18, 1997