(1) Each original title loan must have a term of 30 days.

(2) The loan agreement may provide for 30-day renewal periods beyond the original term if principal and interest are not paid in full on the maturity date. Any 30-day renewal period must be clearly stated on the face of the loan agreement in bold, capital letters. In addition to any other disclosures that may be required by law, licensees must provide the borrower, in the original title loan agreement or by addendum, a statement of the principal and interest which would be due over a six-month period if the borrower fails to make any payments as set forth in Illustration A. This chart is illustrative only. A borrower must make a payment toward the principal or interest every 60 days. However, for the sake of illustration, this chart assumes no such payment is made. If the borrower does not make a payment toward principal or interest within 60 days, the loan is placed into default. Such statement must be initialed by the borrower at the time of the original loan and include the borrower's affirmation that the borrower has been shown and read the statement.

 

Illustration A

	Principal	Interest Per Month at 25%	Accrued Interest at 25%	Total Amount Due
Original Loan	$500.00	$125.00	$125.00	$625.00
Renewal 1	$500.00	$125.00	$250.00	$750.00
Renewal 2	$500.00	$125.00	$375.00	$875.00
Renewal 3	$500.00	$125.00	$500.00	$1,000.00
Renewal 4	$500.00	$125.00	$625.00	$1,125.00
Renewal 5	$500.00	$125.00	$750.00	$1,250.00
Renewal 6	$500.00	$125.00	$875.00	$1,375.00

(3) On the business day following either the end of the original 30-day loan period, or the end of any agreed upon 30-day renewal period, licensees must provide, in person or by mail at the borrower's last known address, a statement disclosing the finance charges that will accrue with the renewal, the new maturity date of the loan, the amount financed, and the annual percentage rate (APR). Licensees may not collect interest on the renewal without proof of having provided the borrower such a statement.

(4) Interest may not compound from one renewal to another.

(5) Interest accrues on a daily basis.

(6) Interest may not be collected before it accrues.

(7) Interest may not be charged on fees. 

(8) A licensee may not continue to accrue interest after the expiration of a title loan agreement, after the period of renewal, or after the redemption date of the loan.

(9) A licensee shall not extend or grant any additional credit other than that which was granted in the original title loan agreement without first requiring full payment of all principal and interest due on the original title loan and all subsequent renewals, and releasing the security interest in the titled property.

(10) Licensees may not issue a new original loan to pay off the previous original loan.

(11) Licensees shall apply payments to fees, interest, and principal in the following order:

(a) first, to accrued fees;

(b) then, to interest; and

(c) then to principal.