MORNBFI Vol. 1 - Planters Development Bank

§§ 4307Q.1 - 4307Q.208.12.31payment upon delivery of the property(except money) or service purchased at theQB’s place of business. In the case offinancial transactions, cash price representsthe amount of money received by the debtorupon consummation of the credittransaction, net of finance charges collectedat the time the credit is extended, if any.c. Down payment represents theamount paid by the debtor at the time of thetransaction in partial payment for theproperty or service purchased.d. Trade-in represents the value of anasset agreed upon by the QB and debtor,given at the time of the transaction as partialpayment for the property or servicepurchased.e. Non-finance charges correspond tothe amounts advanced by the QB for itemsnormally associated with the ownership ofthe property or the availment of the servicepurchased which are not incidental to theextension of credit. For example, in the caseof the purchase of an automobile on credit,the QB may advance the insurance premiumas well as the registration fee for the accountof the debtor.f. Amount to be financed consists ofthe cash price plus non-finance charges lessthe amount of the down payment and valueof the trade-in.g. Finance charge represents theamount to be paid by the debtor incidentalto the extension of credit such as interestor discount, collection fee, creditinvestigation fee, attorney’s fee and otherservice charges.The total finance charge represents thedifference between (i) the aggregateconsideration (down payment plusinstallments) on the part of the debtor, and(ii) the sum of the cash price and nonfinancecharges.h. Simple annual rate is the uniformpercentage which represents the ratio, onan annual basis, between the financecharges and amount to be financed.In the case of single payment uponmaturity, the simple annual rate (R) in percentis determined by the following method:finance charge 12R = amount to be x maturity period x 100financed in monthsIn the case of the normal installment typeof credit of at least one (1) year in duration,where installment payments of equal amountare made in regular time periods spaced notmore than one (1) year apart, the R in percentis computed by the following method:number ofpaymentsfinance charge in a yearR = 2 x amount to be x total number x 100financed of paymentsplus oneIn cases where the credit matures in lessthan one (1) year (e.g., installment paymentsare required every month for six (6) months),the same formula will apply except thatnumber of payments in a year would referto the number of installment periods, asdefined in the credit contract, as if the creditmatures in one (1) year. For example,number of payments in a year would betwelve (12) for this purpose in cases wheresix (6) monthly installment payments arecalled for in the credit transaction 1 . In caseswhere credit terms provide for premium orpenalty charges depending on, for instance,the timeliness of the debtor’s payments, theannual rate to be disclosed in writing shallbe the rate for regular payments, i.e., thepremium and penalty need not be taken intoaccount in the determination of the annualrate. Such premium or penalty charges shall,however, be indicated in the credit contract.§ 4307Q.2 (2008 - 4309Q.2) Informationto be disclosed. QBs shall furnish to eachperson to whom credit is extended, prior tothe consummation of the transaction, a clear1This can be determined by dividing twelve, the number of months in a year, by the number or fraction of monthsbetween installment payments.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsPart III - Page 13