1472

LAWS OF MARYLAND

Ch. 465

FOR the purpose of requiring the use of a certain method for
computing the refund of finance charges on certain
installment sales contracts under certain
circumstances.

BY repealing and reenacting, with amendments,

Article - Commercial Law

Section 12-612(b)(2) and 12-620(b)(l)

Annotated Code of Maryland

(1975 Volume and 1979 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That section(s) of the Annotated Code of Maryland
be repealed, amended, or enacted to read as follows:

Article - Commercial Law

12-612.

(b) (2) The amount of the refund shall be calculated
according to the ["Rule of 78"; that is, the refund shall
represent at least as great a proportion of the total
finance charge as the sum of the periodic time balances
after the date of the prepayment bears to the sum of all the
periodic time balances under the schedule of payments in the
original agreement] ACTUARIAL METHOD BASED ON THE ORIGINAL
SCHEDULE OF PAYMENTS.

12-620.

(b) (1) Except as provided in paragraph (2) of this
subsection, if the buyer pays the time balance in full
before maturity, the holder immediately shall refund to him
a portion of the finance charge. The amount of the refund
shall be calculated by [one of the following methods:

(i) The amount of the refund shall be
calculated according to the "Rule of 78"; that is, the
refund shall represent at least as great a proportion of the
total finance charge as the sum of the periodic time
balances after the date of prepayment bears to the sum of
all the periodic time balances under the schedule of
payments in the original agreement; or

(ii) The amount of the finance charge
shall be divided by the number of months originally provided
for the payment of the time balance under the agreement and
the quotient shall be multiplied by the number of months by
which the payment of the time balance is prepaid by the
buyer] THE ACTUARIAL METHOD BASED ON THE ORIGINAL SCHEDULE
OF PAYMENTS.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act
shall take effect July 1, 1980 January 1, 1981.