N.Y. Comp. Codes R. & Regs. tit. 23 § 600.2

Current through Register Vol. 46, No. 43, October 23, 2024

Section 600.2 - Definition of finance charge

(a)Finance charge means the cost of financing as a dollar amount and equals the sum of:

(1) for all commercial financing transactions, all charges that would be included in the finance charge under the federal Truth in Lending Act, Regulation Z, 12 C.F.R. section 1026.4 (as amended), and only such charges, if the transaction were a consumer credit transaction and the financer were a creditor according to the definition set forth in 15 U.S.C. section 1602(g);

(2) in any accounts receivable purchase transaction that is not a factoring transaction, the discount taken on the face value of the accounts receivable;

(3) in a factoring transaction, the difference between the face value on the invoice and the amount paid directly to the recipient upon assignment of the legally enforceable claim to the financer, inclusive of any factoring fee. For the purpose of the calculation described in the preceding sentence, if the transaction involves a reserve amount, the reserve amount shall also be subtracted from the face value on the invoice only if the financer reasonably anticipates that it will return all reserve amounts to the recipient once it has been paid for the legally enforceable claim or claims assigned by the recipient or upon termination of the contractual relationship between the financer and the recipient, properly crediting payments made by account debtors and previous collections by the financer from the recipient, all amounts held in reserve, and payments by insurers on defaulted accounts. In determining what the financer can reasonably anticipate, the financer shall consider past performance of similar contracts (both those made to the recipient and other similar recipients) and the policies and procedures of the financer; and

(4) in any lease financing transaction, the sum of lease payments (including any regular periodic payments and irregular payments) and price of the purchase option that the lessee may pay to acquire the leased goods at the end of the lease, less the amount financed.

(b) For products where any part of the finance charge is based upon interest that accrues on the outstanding principal balance owed by the recipient, the interest charge adjusts over time, and it is not possible to calculate the interest charges in advance for the entire term of the transaction because the charge adjusts based upon a benchmark rate plus a margin, the provider shall calculate the interest charges for periods of time when the interest charge cannot be calculated in advance based upon the benchmark rate in effect at the time of disclosure and the margin.

(c) For the purpose of the calculation required by subdivision (a) of this section, a charge or amount that meets the requirements of subdivisions (a)(i) and subdivisions (a)(ii), (a)(iii), or (a)(iv) of this section shall not be counted twice.

(d) For purposes of the calculation required by subdivision (a) of this section, avoidable fees and charges that are not imposed as an incident to credit are excluded from the finance charge.

N.Y. Comp. Codes R. & Regs. Tit. 23 § 600.2

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