17:9A-59.2. Written contract; necessity; effective date; contents

A. No advance loan shall be made except pursuant to a written contract, referred to in this act as an "advance loan contract," between the bank and a borrower or borrowers. An advance loan contract shall become effective when an agreement is signed by the advance loan borrower or when the advance loan borrower or someone authorized by the advance loan borrower effects an advance loan in the manner provided by section 1 of this act. The advance loan contract may contain such provisions, not inconsistent with this act or otherwise prohibited by law, which the bank and the borrower may agree upon, but each such contract shall state:

(a) The amount, exclusive of interest, insurance premiums and other charges, in which the borrower may be indebted to the bank at any one time upon all advance loans made pursuant to one or more advance loan contracts entered into between the bank and such borrower or borrowers;

(b) The number of days or the period, if any, after the closing date of the billing cycle within which payments are required to be made on advance loans;

(c) The amount of each payment required to be made monthly on advance loans. Such amount may be stated in terms of dollars and cents, or in any other terms consistent with the limitations imposed by section 5 of this act;

(d) The rate of interest payable on such loans;

(e) If late charges are to be made on installments in arrears, the amount of the charge which will be imposed, subject to the limitations contained in section 7; and

(f) If service charges are to be made on advance loans, the amount of the charge which will be imposed, subject to the limitation contained in section 8.

B. When an advance loan contract provides that the bank will make advance loans to a depositor for the purpose of covering overdrafts in an account maintained in the bank by the depositor, the contract shall also provide how the amount of such loans shall be determined when overdrafts occur. The advance loan contract may provide that the amount of the advance loan shall equal the amount by which the account is overdrawn, or it may provide that, when the amount of the overdraft is not in a sum equal to an even multiple of $100.00, or an even multiple of such other sum, less than $100.00, as the contract may prescribe, the amount of the loan shall equal the nearest even multiple of $100.00, or the nearest even multiple of such other sum, less than $100.00, as the contract may prescribe, which is greater than the amount of such overdraft.

C. If the bank has adopted a program pursuant to which either or both credit life insurance and credit accident and health insurance may be applied for on behalf of advance loan borrowers, and, if an advance loan borrower requests in writing that either or both such insurances be obtained, the contract shall so indicate. If the contract provides that more than one person may borrow under its provisions, the contract shall state the name of the person to be covered by such insurance. Nothing herein shall be construed as requiring that a bank undertake to make such insurance available to advance loan borrowers.

D. No advance loan contract, and no instrument executed in connection therewith, shall contain any power to confess judgment or provide that payment of the advance loan shall be accelerated because the bank deems itself insecure.

L.1959, c. 91, p. 224, s. 2. Amended by L.1968, c. 64, s. 2; L.1981, c. 37, s. 2, eff. Feb. 12, 1981.