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#506343 - 03/01/06 02:18 PM Alabama-Maximum Extension Fee
jjames Offline
Member
Joined: May 2005
Posts: 51
I am trying to determine the maximum extension fee that can be charged on both consumer and commercial loan. I have read over the Code of Alabama and it appears that there is a maximum for loans under $2,000 ($10 or 5% of the scheduled payment), but I don't see anything that applies to other larger loans. I have contacted someone in the Alabama Banking Department, but haven't got a solid answer yet. Does anyone have any guidance? Thanks!

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#506344 - 03/06/06 03:20 PM Re: Alabama-Maximum Extension Fee
ToTo Offline
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Joined: Apr 2004
Posts: 595
OZ
I believe the fee you're referencing is a late payment fee when an installment is in default 10 days or more, and is not a "deferral" or "extension" fee. Additonally, I don't believe that the late fee provision (5-19-4(a)) of the mini-code is limited to loans under $2,000, and it applies to all consumer loans, regardless of the size. Also, doesn't this provision impose a maximum late fee of $100?

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#506345 - 03/07/06 01:55 PM Re: Alabama-Maximum Extension Fee
jjames Offline
Member
Joined: May 2005
Posts: 51
The fee that I am referring to is the fee that will be charged when a borrower comes in to ask for an extension on a single pay loan. We have set the maximum late fee to $100, but we just weren't sure about the fee for extending a loan. Thanks!

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#506346 - 03/08/06 10:22 PM Re: Alabama-Maximum Extension Fee
ToTo Offline
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Joined: Apr 2004
Posts: 595
OZ
I really don't know. When we asked outside counsel about this years ago on consumer loans, we were advised not to charge anything other than the interest that accrued during the period -- so we don't. We were also advised to be sure to get the consumers consent to the fee in writing and to be sure to advise of any other consequences in the consent (for example, if credit life is not extended beyond the loan's original maturity date, that should be stated). I don't think there are any limitations on commercial loans in Alabama, other than the finance charge limitation on commercial loans under $2000.

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#506347 - 03/10/06 09:32 PM Re: Alabama-Maximum Extension Fee
jjames Offline
Member
Joined: May 2005
Posts: 51
Thank you so much! This information will help us. Thanks again!

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