N.Y. Comp. Codes R. & Regs. tit. 23 § 600.11

Current through Register Vol. 46, No. 36, September 4, 2024

Section 600.11 - Open-end commercial financing disclosure formatting and contents

Disclosures for commercial open-end financings, provided in accordance with Financial Services Law section 805 shall comply with the requirements of this section.

(a) The provider shall present the disclosures in a table consisting of twelve rows and three columns.

(b) In the first row, the first, second and third columns shall be combined, and the resulting cell shall have only the following language, in italics:

(1) If the contract allows only for a single payment option: "The calculations below are based on an initial draw of your full Approved Credit Limit of and assume that you will pay off the draw entirely according to the agreed payment schedule, that you miss no payments, and that you do not re-draw on this line. Actual costs may differ substantially."

(2) If the contract allows for multiple payment options: "The calculations below are based on an initial draw of your full Approved Credit Limit of and assume that you will choose to make minimum payments, that you miss no payments, and that you do not re-draw on this line. Actual costs may differ substantially."

(3) If the amount borrowed is payable on demand, the provider shall include a short explanation that amounts borrowed are payable on demand and that the estimate assumes a term of one year.

(4) If an alternate maturity date is stated in the legal obligation between the parties, then the provider shall include a short explanation that the disclosure is based upon that maturity date.

(c) The second row of the table shall include only the following information:

(1) in the first column, the following language: "Funding Provided";

(2) in the second column, the amount financed;

(3) in the third column, in the order listed and in one paragraph:

(i) "This is the maximum amount of funding may provide."

(ii) "If the amount financed is greater than the recipient funds: "Due to deductions or payments to others, the total funds that will be provided to you directly if you request the maximum amount is. For more information on what amounts will be deducted, please review the attached document Itemization of Amount Financed."

(iii) If any portion of the amount financed will be used to pay down or pay off other amounts owed by the recipient that may change over time, and the amounts owed are known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change if the amount owed for the recipient's other obligations changes.

(iv) If, as a condition of financing, a recipient's amounts owed to third parties must be paid down or paid off using funds from the amount financed, and the amount owed is not known to the provider, the provider shall also include a short explanation that the amount paid directly to the recipient may change based upon the required disbursements to satisfy other obligations.

(v) If any portion of the amount financed will be used to satisfy obligations under another financing with the provider, in the third column, in a second paragraph: "Does the renewal financing include any amount that is used to pay unpaid finance charges or fees, also known as double dipping? {Yes, enter amount}. If the amount is zero, the answer would be No." If the financing being satisfied featured a fixed finance fee that did not vary based on the repayment period, the provider shall consider the amount that is used to pay unpaid finance charges or fees to be the pro rata portion of such finance fee based upon the fraction of the original total amount financed of the previous financing already repaid by the recipient.

(d) The third row of the table shall include only the following information:

(1) in the first column:

(i) if the contract provides for a fixed interest rate or rates that are predetermined by the contract, the following language: "Annual Percentage Rate (APR)"; or

(ii) if the contract provides for an adjustable interest rate and it is not possible to calculate the interest rates throughout the term of the transaction in advance, the following language: "Initial Annual Percentage Rate (APR)";

(2) in the second column, the provider's calculation of the annual percentage rate calculated in accordance with section 600.3 of this Part;

(3) in the third column:

(i) if the contract provides for a single, fixed interest rate, the following language:

"APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and other finance charges you pay and the payments you make.

APR is not an interest rate. Your interest rate is. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges.

(ii) if the contract provides for multiple pre-determined interest rates that change over time, the following language:

"APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and other finance charges you pay and the payments you make.

Your APR is not an interest rate. Your initial interest rate is. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges."; or

(iii) if the contract provides for an adjustable interest rate and it is not possible to calculate the interest rates throughout the term of the transaction in advance, the following language:

"APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, interest and other finance charges you pay and the payments you make.

APR is not an interest rate. Your initial interest rate is. Although your interest rate will adjust over time, for the purposes of calculating this APR estimate, we have used the initial interest rate for future periods where the interest rate is not preset by the contract. Your APR may be higher than your interest rate because APR incorporates interest costs and other finance charges."

(iv) If no part of the finance charge is based upon an interest rate, the following language:

"APR is the cost of your financing expressed as a yearly rate. APR includes the amount and timing of the funding you receive, and the payments you make.

APR is not an interest rate. The cost of this financing is based upon fees charged rather than interest that accrues over time."

(e) The fourth row of the table shall include only the following information:

(1) in the first column the following language: "Estimated Finance Charge";

(2) in the second column, the total finance charge calculated in accordance with section 600.2 of this Part; and

(3) in the third column:

(i) "This is the dollar cost of our financing based upon the assumptions described at the top of this disclosure."; and

(ii) if the contract provides for an adjustable interest rate or rates that are not predetermined by the contract: "The interest rate under your contract will adjust over time, so your actual finance charge may vary."

(f) The fifth row of the table shall include only the following information:

(1) in the first column: "Estimated Total Payments";

(2) in the second column, the total estimated payments the recipient will make during the term of the contract if the recipient makes minimum required payments; and

(3) in the third column: "This is the total dollar amount of payments you will make during the term of the contract based upon the assumptions described at the top of this disclosure."

(g) The sixth row of the table shall include only the following information:

(1) in the first column "Estimated Payment";

(2) if periodic payments during the term of the transaction will not vary over the term of the transaction:

(i) in the second column, the amount of the periodic payment followed by a forward slash (/) and the frequency of each periodic payment followed by the date and amount of any irregular payments listed in chronological order; and

(ii) in the third column, a short explanation of when each payment will become due;

(3) if periodic payments during the term of the transaction vary and it is possible to calculate the payment amounts in advance, the second and third columns in the fifth row shall be combined and the provider shall list the periodic payment and when each amount will become due followed by the date and amount of any irregular payments listed in chronological order and any assumptions made when calculating the payment amounts. For example:

Months 1-12: $600/month Months 13-24: $1200/month

Maintenance Fee Due 2/1/2021: $500 Maintenance Fee Due 8/1/2022: $300;

(4) if periodic payments during the term of the transaction vary and it is not possible to calculate all payment amounts in advance because the transaction has an adjustable interest rate that cannot be calculated in advance:

(i) in the second column, a periodic payment amount calculated using the initial interest rate followed by the date and amount of any reasonably anticipated irregular payments listed in chronological order; and

(ii) in the third column, a short explanation that the periodic payment amount disclosed is based upon the initial interest rate, and that the actual rate may change over time. The provider may also include a short explanation describing when the payment will adjust and how it will be calculated; and

(5) if periodic payments of principal during the term of the transaction do not vary but periodic payments of interest during the term of the transaction vary, and it is not possible to calculate all interest payment amounts in advance, because the transaction has an adjustable interest rate that cannot be calculated in advance:

(i) in the second column, the phrase "Initial Interest Payment:" followed by an interest payment amount calculated using the initial interest rate, followed by a forward slash (/) and the frequency of each periodic interest payment;

(ii) in the second column, beneath the disclosure required by paragraph (5)(i) of this subdivision, the phrase "Principal Payment Amount:" followed by the amount of each periodic principal payment, followed by a forward slash (/) and the frequency of each periodic principal payment;

(iii) in the third column, a short explanation that the Initial Interest Payment Amount disclosed is based upon the initial interest rate, and that the actual rate may change over time; and

(iv) in the third column, beneath the statement explaining the Initial Interest Payment Amount and at the same height as the disclosure required under paragraph (5)(ii) of this subdivision, a short explanation of the principal payment amount and frequency.

(h) The seventh row of the table shall include only the following information:

(1) in the first column, the following language: "Draw Period";

(2) in the second column, the draw period for the transaction; and

(3) in the third column, a short explanation of the draw period for the transaction;

(i) The eighth row of the table shall include no information in the third column, and the remaining columns shall include only the following information:

(1) in the first column, the following language: "Term"; and

(2) in the second column, the term of the transaction.

(j) In the first column, the ninth and tenth rows shall be combined and shall include only the following language: "Prepayment".

(k) In the ninth row, the second and third columns shall be combined and shall include only:

(1) if, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay finance charges other than interest accrued and unpaid, the following statement: "If you pay off the financing early you will need to pay all or a portion of the finance charge, up to $."; or

(2) in all other cases, "If you pay off the financing early, you will not need to pay any portion of the finance charge other than unpaid interest accrued (if applicable)."

(l) In the tenth row, the second and third columns shall be combined and shall include only:

(1) if, at any time during the term of the transaction, prepayment of the outstanding balance due will require the recipient to pay additional fees and charges not included in the finance charge relating to the prepayment, the following statement: "If you pay off the financing early you must also pay the following additional fees:" followed by the amounts and descriptions of the additional fees and charges; or

(2) in all other cases, the following statement, "If you pay off the financing early you will not pay additional fees."

(m) The eleventh row of the table shall include only the following information:

(1) in the first column, the following language: "Collateral Requirements"; and

(2) the second and third columns shall be combined and shall include only a description of the collateral requirements or security interests of the transaction, if any.

(n) The twelfth row of the table shall include only the following information:

(1) in the first column, the following language: "Avoidable Fees and Charges"; and

(2) the second and third columns shall be combined and shall include only a description of all potential fees and charges that can be avoided by the recipient, if any, including, but not limited to, late payment fees and returned payment fees.

(o) If the contract provides for periodic payments that are not monthly, the provider shall insert one additional row below the fifth row, and the additional row shall include only the following information:

(1) in the first column, the following language: "Average Monthly Cost";

(2) in the second column, the average monthly cost that the recipient will pay over the term of the transaction; and

(3) in the third column: "Although this financing does not have monthly payments, this is our calculation of your average monthly cost for comparison purposes."

N.Y. Comp. Codes R. & Regs. Tit. 23 § 600.11

Adopted New York State Register February 1, 2023/Volume XLV, Issue 05, eff. 2/1/2023