For covered retail installment contracts, the holder must refund or credit the buyer the unearned time price differential after prepayment or a demand for full payment.
Sec. 353.121. REFUND ON CONTRACTS USING SCHEDULED INSTALLMENT EARNINGS METHOD. (a) This section: (1) applies to a retail installment contract: (A) that includes precomputed time price differential; and (B) to which Section 353.120 does not apply; and (2) does not apply to a retail installment contract in which the time price differential is computed using the true daily earnings method. (b) If a retail installment contract is prepaid in full or if the holder demands payment in full of the unpaid balance before final maturity of the contract, the holder earns time price differential for the period beginning on the date of the contract and ending on the date of the earlier of the prepayment or demand, in an amount that does not exceed the amount allowed by this section. (c) If prepayment in full or demand for payment in full occurs during an installment period, the holder may retain, in addition to time price differential that accrued during any elapsed installment periods, an amount computed by: (1) multiplying the simple annual rate under the contract by the unpaid principal balance of the contract determined according to the schedule of payments to be outstanding on the preceding installment due date; (2) dividing 365 into the product computed under Subdivision (1); and (3) multiplying the number of days in the period, beginning on the day after the installment due date and ending on the date of the earlier of the prepayment or demand, by the result obtained under Subdivision (2). (d) In addition to the earned time price differential computed under this section, the holder may also earn a $150 acquisition fee for a heavy commercial vehicle, or a $25 acquisition fee for other commercial vehicles, if the sum of the earned time price differential and the acquisition fee does not exceed the time price differential disclosed in the contract. (e) The holder shall refund or credit, as applicable, to the retail buyer the amount computed by subtracting the total amount earned or retained under Subsections (b), (c), and (d) from the total amount of time price differential contracted for and precomputed in the contract. Added by Acts 2011, 82nd Leg., R.S., Ch. 117 (H.B. 2559), Sec. 17, eff. September 1, 2011.