75-17-11 - Rate of interest, amount of finance charge or rate of finance charge where specified to be paid at period of less than one year; payment earlier than final maturity; computation of interest
§ 75-17-11. Rate of interest, amount of finance charge or rate of finance charge where specified to be paid at period of less than one year; payment earlier than final maturity; computation of interest upon prepayment of note; usurious rates; notes containing final balloon payment.
When any particular rate of interest per annum or amount of finance charge or rate of finance charge is specified in any contract, note or evidence of indebtedness, it shall not be construed as any increase of said rate of interest or amount of finance charge or rate of finance charge merely that the interest at the specified rate per annum or amount of finance charge or rate of finance charge is stipulated to be paid quarterly, or semiannually, or at any other period less than a year, nor shall the fact that the principal and interest or finance charge is paid at a date earlier than the final maturity date of the contract, note or evidence of indebtedness be taken as any increase of the rate per centum or amount of finance charge or rate of finance charge although paid for the whole period of the contract, note or evidence of indebtedness and regardless of whether or not there is a contractual right of prepayment. Upon prepayment of any contract, note or evidence of indebtedness with the agreement of the lender or holder of such contract, note or evidence of indebtedness before final maturity, whether voluntarily, involuntarily by acceleration or otherwise, and whether by cash, renewal or otherwise, any rebate of interest or finance charge may be computed by the sum of the digits method, commonly referred to as the Rule of 78's method, by the actuarial method, or by the simple interest method. The use of any such method to compute a rebate of interest or finance charge shall not be considered or result in any penalty, prepayment or otherwise, nor be deemed to increase the yield, annual percentage rate, amount of finance charge, rate of finance charge, amount of interest charge, or rate of interest charge. Any such contract, note, or evidence of indebtedness and all provisions thereof shall be valid for the amount of the principal, interest, and finance charges contracted for or received, and such contract, note or evidence of indebtedness shall not be held usurious. However, with respect to a note containing a final balloon payment provision originally payable to a bank and executed after July 1, 1990, the Rule of 78's method may not be used to compute any rebate of finance charges that may be due upon prepayment if the resulting yield would be usurious.
Sources: Codes, 1930, § 1951; 1942, § 41; Laws, 1926, ch. 179; Laws, 1954, ch. 322; Laws, 1990, ch. 481, § 1, eff from and after passage (approved March 27, 1990), and shall apply only to any contract, note or evidence of indebtedness originally executed after March 27, 1990.