US Laws, Codes, Statutes & Cases

From the U.S. Code Online via GPO Access
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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 15USC1638]

 
                      TITLE 15--COMMERCE AND TRADE
 
                 CHAPTER 41--CONSUMER CREDIT PROTECTION
 
              SUBCHAPTER I--CONSUMER CREDIT COST DISCLOSURE
 
                       Part B--Credit Transactions
 
Sec. 1638. Transactions other than under an open end credit plan


(a) Required disclosures by creditor

    For each consumer credit transaction other than under an open end 
credit plan, the creditor shall disclose each of the following items, to 
the extent applicable:
        (1) The identity of the creditor required to make disclosure.
        (2)(A) The ``amount financed'', using that term, which shall be 
    the amount of credit of which the consumer has actual use. This 
    amount shall be computed as follows, but the computations need not 
    be disclosed and shall not be disclosed with the disclosures 
    conspicuously segregated in accordance with subsection (b)(1) of 
    this section:
            (i) take the principal amount of the loan or the cash price 
        less downpayment and trade-in;
            (ii) add any charges which are not part of the finance 
        charge or of the principal amount of the loan and which are 
        financed by the consumer, including the cost of any items 
        excluded from the finance charge pursuant to section 1605 of 
        this title; and
            (iii) subtract any charges which are part of the finance 
        charge but which will be paid by the consumer before or at the 
        time of the consummation of the transaction, or have been 
        withheld from the proceeds of the credit.

        (B) In conjunction with the disclosure of the amount financed, a 
    creditor shall provide a statement of the consumer's right to 
    obtain, upon a written request, a written itemization of the amount 
    financed. The statement shall include spaces for a ``yes'' and 
    ``no'' indication to be initialed by the consumer to indicate 
    whether the consumer wants a written itemization of the amount 
    financed. Upon receiving an affirmative indication, the creditor 
    shall provide, at the time other disclosures are required to be 
    furnished, a written itemization of the amount financed. For the 
    purposes of this subparagraph, ``itemization of the amount 
    financed'' means a disclosure of the following items, to the extent 
    applicable:
            (i) the amount that is or will be paid directly to the 
        consumer;
            (ii) the amount that is or will be credited to the 
        consumer's account to discharge obligations owed to the 
        creditor;
            (iii) each amount that is or will be paid to third persons 
        by the creditor on the consumer's behalf, together with an 
        identification of or reference to the third person; and
            (iv) the total amount of any charges described in the 
        preceding subparagraph (A)(iii).

        (3) The ``finance charge'', not itemized, using that term.
        (4) The finance charge expressed as an ``annual percentage 
    rate'', using that term. This shall not be required if the amount 
    financed does not exceed $75 and the finance charge does not exceed 
    $5, or if the amount financed exceeds $75 and the finance charge 
    does not exceed $7.50.
        (5) The sum of the amount financed and the finance charge, which 
    shall be termed the ``total of payments''.
        (6) The number, amount, and due dates or period of payments 
    scheduled to repay the total of payments.
        (7) In a sale of property or services in which the seller is the 
    creditor required to disclose pursuant to section 1631(b) of this 
    title, the ``total sale price'', using that term, which shall be the 
    total of the cash price of the property or services, additional 
    charges, and the finance charge.
        (8) Descriptive explanations of the terms ``amount financed'', 
    ``finance charge'', ``annual percentage rate'', ``total of 
    payments'', and ``total sale price'' as specified by the Board. The 
    descriptive explanation of ``total sale price'' shall include 
    reference to the amount of the downpayment.
        (9) Where the credit is secured, a statement that a security 
    interest has been taken in (A) the property which is purchased as 
    part of the credit transaction, or (B) property not purchased as 
    part of the credit transaction identified by item or type.
        (10) Any dollar charge or percentage amount which may be imposed 
    by a creditor solely on account of a late payment, other than a 
    deferral or extension charge.
        (11) A statement indicating whether or not the consumer is 
    entitled to a rebate of any finance charge upon refinancing or 
    prepayment in full pursuant to acceleration or otherwise, if the 
    obligation involves a precomputed finance charge. A statement 
    indicating whether or not a penalty will be imposed in those same 
    circumstances if the obligation involves a finance charge computed 
    from time to time by application of a rate to the unpaid principal 
    balance.
        (12) A statement that the consumer should refer to the 
    appropriate contract document for any information such document 
    provides about nonpayment, default, the right to accelerate the 
    maturity of the debt, and prepayment rebates and penalties.
        (13) In any residential mortgage transaction, a statement 
    indicating whether a subsequent purchaser or assignee of the 
    consumer may assume the debt obligation on its original terms and 
    conditions.
        (14) In the case of any variable interest rate residential 
    mortgage transaction, in disclosures provided at application as 
    prescribed by the Board for a variable rate transaction secured by 
    the consumer's principal dwelling, at the option of the creditor, a 
    statement that the periodic payments may increase or decrease 
    substantially, and the maximum interest rate and payment for a 
    $10,000 loan originated at a recent interest rate, as determined by 
    the Board, assuming the maximum periodic increases in rates and 
    payments under the program, or a historical example illustrating the 
    effects of interest rate changes implemented according to the loan 
    program.

(b) Form and timing of disclosures; residential mortgage transaction 
        requirements

    (1) Except as otherwise provided in this part, the disclosures 
required under subsection (a) of this section shall be made before the 
credit is extended. Except for the disclosures required by subsection 
(a)(1) of this section, all disclosures required under subsection (a) of 
this section and any disclosure provided for in subsection (b), (c), or 
(d) of section 1605 of this title shall be conspicuously segregated from 
all other terms, data, or information provided in connection with a 
transaction, including any computations or itemization.
    (2) In the case of a residential mortgage transaction, as defined in 
section 1602(w) of this title, which is also subject to the Real Estate 
Settlement Procedures Act [12 U.S.C. 2601 et seq.], good faith estimates 
of the disclosures required under subsection (a) of this section shall 
be made in accordance with regulations of the Board under section 
1631(c) of this title before the credit is extended, or shall be 
delivered or placed in the mail not later than three business days after 
the creditor receives the consumer's written application, which ever is 
earlier. If the disclosure statement furnished within three days of the 
written application contains an annual percentage rate which is 
subsequently rendered inaccurate within the meaning of section 1606(c) 
of this title, the creditor shall furnish another statement at the time 
of settlement or consummation.

(c) Timing of disclosures on unsolicited mailed or telephone purchase 
        orders or loan requests

    (1) If a creditor receives a purchase order by mail or telephone 
without personal solicitation, and the cash price and the total sale 
price and the terms of financing, including the annual percentage rate, 
are set forth in the creditor's catalog or other printed material 
distributed to the public, then the disclosures required under 
subsection (a) of this section may be made at any time not later than 
the date the first payment is due.
    (2) If a creditor receives a request for a loan by mail or telephone 
without personal solicitation and the terms of financing, including the 
annual percentage rate for representative amounts of credit, are set 
forth in the creditor's printed material distributed to the public, or 
in the contract of loan or other printed material delivered to the 
obligor, then the disclosures required under subsection (a) of this 
section may be made at any time not later than the date the first 
payment is due.

(d) Timing of disclosure in cases of an addition of a deferred payment 
        price to an existing outstanding balance

    If a consumer credit sale is one of a series of consumer credit 
sales transactions made pursuant to an agreement providing for the 
addition of the deferred payment price of that sale to an existing 
outstanding balance, and the person to whom the credit is extended has 
approved in writing both the annual percentage rate or rates and the 
method of computing the finance charge or charges, and the creditor 
retains no security interest in any property as to which he has received 
payments aggregating the amount of the sales price including any finance 
charges attributable thereto, then the disclosure required under 
subsection (a) of this section for the particular sale may be made at 
any time not later than the date the first payment for that sale is due. 
For the purposes of this subsection, in the case of items purchased on 
different dates, the first purchased shall be deemed first paid for, and 
in the case of items purchased on the same date, the lowest price shall 
be deemed first paid for.

(Pub. L. 90-321, title I, Sec. 128, May 29, 1968, 82 Stat. 155; Pub. L. 
96-221, title VI, Sec. 614(a)-(c), Mar. 31, 1980, 94 Stat. 178, 179; 
Pub. L. 104-208, div. A, title II, Sec. 2105, Sept. 30, 1996, 110 Stat. 
3009-402.)

                       References in Text

    The Real Estate Settlement Procedures Act, referred to in subsec. 
(b)(2), probably refers to the Real Estate Settlement Procedures Act of 
1974, Pub. L. 93-533, Dec. 22, 1974, 88 Stat. 1724, as amended, which is 
classified principally to chapter 27 (Sec. 2601 et seq.) of Title 12, 
Banks and Banking. For complete classification of this Act to the Code, 
see Short Title note set out under section 2601 of Title 12 and Tables.


                               Amendments

    1996--Subsec. (a)(14). Pub. L. 104-208 added par. (14).
    1980--Subsec. (a). Pub. L. 96-221, Sec. 614(a), substituted 
provisions setting forth required disclosures by the creditor for 
transactions other than under an open end credit plan, for provisions 
setting forth required disclosures by the creditor for sales not under 
open end credit plans.
    Subsec. (b). Pub. L. 96-221, Sec. 614(b), designated existing 
provisions as par. (1), inserted provisions relating to the conspicuous 
segregation of required disclosures, and struck out provisions 
authorizing the required information to be disclosed in the signed 
evidence of indebtedness, and added par. (2).
    Subsec. (c). Pub. L. 96-221, Sec. 614(c), designated existing 
provisions as par. (1), substituted ``total sale'' for ``deferred 
payment'', and added par. (2).


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-221 effective on expiration of two years and 
six months after Mar. 31, 1980, with all regulations, forms, and clauses 
required to be prescribed to be promulgated at least one year prior to 
such effective date, and allowing any creditor to comply with any 
amendments, in accordance with the regulations, forms, and clauses 
prescribed by the Board prior to such effective date, see section 625 of 
Pub. L. 96-221, set out as a note under section 1602 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1632, 1640 of this title.