§ 25A-27. Application of payments.
§25A‑27. Application of payments.
(a) Where a seller in aconsumer credit sale makes a subsequent sale to a buyer and takes a securityinterest pursuant to G.S. 25A‑23 in goods previously purchased by thebuyer from the seller, the seller shall make application of payments received,for the purpose of determining the amount of the debt secured by the varioussecurity interests, as follows:
(1) The entire amount ofall payments made prior to such subsequent purchase shall be deemed to havebeen applied to the previous purchases, and
(2) Unless otherwisedesignated by the buyer, the amount of down payment on such subsequent purchaseshall be applied to the subsequent purchase, and
(3) All subsequentpayments shall be applied first to finance charges and then to principal. Theapplication of payments to principal shall be applied to the various purchaseson the basis that the first sums paid in shall be deemed applied to the oldestpurchase or obligation assumed to satisfy the original debt secured by the purchasemoney security interest until payment is received in full and other paymentsshall be applied accordingly to all other purchases in the order that eachobligation is assumed. At the time any original debt would have been satisfiedby subsequent payments, the purchase money security interest in said purchaseshall be extinguished.
(b) Where a seller anda buyer agree to consolidate two or more consumer credit installment salecontracts pursuant to G.S. 25A‑31, the seller shall apply paymentsreceived, for the purpose of determining the amount of the debt secured by thevarious security interests, as follows:
(1) The entire amount ofall payments received prior to the consolidation shall be applied to therespective contracts under which the payments were made, and
(2) All subsequentpayments shall be applied first to finance charges and then to principal. Theapplication of payments to principal shall be applied to the various purchaseson the basis that the first sums paid in shall be deemed applied to the oldestpurchase or obligation assumed to satisfy the original debt secured by thepurchase money security interest until payment is received in full and otherpayments shall be applied accordingly to all other purchases in the order thateach obligation is assumed. At the time any original debt would have beensatisfied by subsequent payments, the purchase money security interest in saidpurchase shall be extinguished.
(c) For paymentsreceived by a seller on or after October 1, 1988, but before October 1, 1993, aseller may elect to apply the provisions of this section as the section readOctober 1, 1993, or as the section read September 30, 1993. A seller made thiselection when the seller determined, and disclosed to the buyer, how paymentsreceived on a consumer credit sale would be applied: either on a proportionalbasis or on a "first in first out" basis with the payments appliedfirst to finance charges and then to principal in the order that eachobligation is assumed.
(d) The exclusiveremedy for failure of a seller to apply payments of a buyer as required bysubdivision (a)(3) or (b)(2) of this section during the period October 1, 1993,through October 1, 1996, is an order that the seller apply the payments asrequired by those provisions. (1971, c. 796, s. 1; 1993, c.370, s. 2; 1993 (Reg. Sess., 1994), c. 745, s. 38.3(a).)