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#38228 - 10/22/02 04:02 PM ILA Late fees
Kari Offline
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Kari
Joined: Sep 2002
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PA
Okay, 2 questions in one day...!!
Occ told me to refer to PA Code. Which I did however I am still confused. Consumer installment loan late fees are currently 2.50 or 5% of the amount of the installment. However, we are considering raising that. PA code states installment and extensions of credit to indiv etc are different.
My questions which is turning out to be not so simple is.... Can we raise our late fees on individual installment loans (car, etc)?

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#38229 - 10/22/02 04:35 PM Re: ILA Late fees
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Well that will depend on PA's code. You should definitely be able to raise your fees to the maximum allowable for your new loans, but may not be able to for existing loans. In IN our late fees are adjusted every 2 years. At that time we can increase the late fees for new accounts and we can also, if the proper disclsoure was given and contracted for, increase the late fees on the existing accounts. Look at PA's code to see what your options are.
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#38230 - 10/22/02 05:14 PM Re: ILA Late fees
Andy_Z Offline
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If your contract says your late fee may be the maximum allowed by law you could increase it. Likely it is specific and says you may charge 2.5% or 5%, whatever, of the installment due. That means the adjustment would require an agreed contractual change with each borrower.
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#38231 - 10/22/02 05:49 PM Re: ILA Late fees
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Andy is correct in that it depends how your contract reads. This is how our contract reads both in the Fed Box and under the contract clause of the note:

Late Charge : If a payment is more than 10 days late, I will be charged 5.000 percent of the unpaid portion of payment or $16.00, whichever is less.

These amounts may change pursuant to Indiana Code 24-4.5-1-106 and 24-4.5-3-203.5 so as to always be the maximum amount allowed by law.

Look for similar language in your contracts.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#38232 - 10/24/02 01:10 PM Re: ILA Late fees
Kari Offline
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Kari
Joined: Sep 2002
Posts: 131
PA
Our contract reads more than 15 days the $2.50 or 5% whichever is less on our installment, individual loans. The PA code says for installment $2.50 or 5% but for individual credit $20. Aren't installment loans individual loans, this is where we are getting confused. Any help?

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#38233 - 10/24/02 01:26 PM Re: ILA Late fees
Andy_Z Offline
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Andy_Z
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You are getting very specific now as you discuss state laws, definitions and practices. I can't answer your question but you might try the PA forum in the main index. Hopefully a PA banker will be able to provide some info. These can get tricky.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#38234 - 10/24/02 01:48 PM Re: ILA Late fees
Dan Persfull Offline
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Dan Persfull
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Posts: 46,761
Bloomington, IN
I have to agree with Andy that you are getting specific into PA laws and you'll need a PA banker to help you out.

You may want to call your state's Department of Financial Institutions (that's what it's called in IN anyway) and speak to them about your options and have them explain the difference between the definitions of an installment loan and an individual loan. It may be a difference between an installment loan and a single pay loan, just a thought.

Anyway, our DFI is very helpful in answering questions for us and I would assume that PA's would be too.
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The opinions expressed are mine and they are not to be taken as legal advice.

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