Brief⁽¹⁾

S.B. 470, as amended, would reinstate in Kansas law a provision for retail merchants to calculate consumer credit sales on a precomputed basis. The Uniform Consumer Credit Code would be amended to allow creditors to calculate the finance charge on a sale assuming that all payments will be made when due (precomputing the interest to be paid with the principal over a fixed number of payments).

Upon allowing precomputation, the law would be amended to provide a formula for returning to the buyer any portion of the interest charged but not earned because the consumer prepaid the debt. S.B. 470 would require that the rebate be calculated on the actuarial (simple interest) basis.

The House Committee amendment adds language to make it clear the rebate of charges for insurance continues according to statute, rules and regulations, and administrative interpretations of the Code administrator, the Consumer Credit Commissioner.

Background

Prior to 1994, the Uniform Consumer Credit Code contained provisions for precomputed transactions, but that authorization was removed. S.B. 470 reinstates the use of such computations and was requested by the Kansas Retail Council and supported by the Consumer Credit Commissioner.

The House Committee amendment was presented by the Commissioner as a clarification that the existing method for handling insurance premium rebates continues.

The fiscal note accompanying the bill indicates it would have no fiscal effect.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext-bill.html.