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Substitute Senate Bill No. 319

PUBLIC ACT NO. 96-38

AN ACT CONCERNING OPEN-END LOANS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Subsection (c) of section 36a-565 of the general statutes, as amended by public act 95-28, is repealed and the following is substituted in lieu thereof:

(c) A licensee may make open-end loans and may charge, contract for and receive thereon interest at an annual percentage rate not to exceed nineteen and eight-tenths per cent for any open-end loan agreement entered into on and after July 1, 1991. A licensee may also receive, pursuant to any such agreement entered into on and after July 1, 1991, one or more of the following charges if the agreement so provides: (1) An annual fee not to exceed [thirty-five] FIFTY dollars for the privileges made available to the borrower under the open-end loan agreement; (2) a default charge subject to the conditions and restrictions set forth in subsection (d) of section 36a-563; (3) a bad check charge not exceeding ten dollars for any payment made by check or draft that is returned unpaid to the licensee due to insufficient funds or because the account on which the check or draft was drawn does not exist; and (4) reasonable attorneys' fees subject to the conditions and restrictions set forth in section 42-150aa. In addition to the charges provided for by this section, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for or received. If interest or any charges in excess of those permitted by this section are charged, contracted for or received, except as the result of a bona fide error, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges. No person shall owe any licensee, as such, at any time more than fifteen thousand dollars for principal as a borrower, comaker or guarantor for loans made under this section. As used in this section, the term "bona fide error" includes, but shall not be limited to, clerical, calculation, computer malfunction and programming and printing errors, but does not include an error of legal judgment with respect to a person's obligations under sections 36a-555 to 36a-573, inclusive AS AMENDED.

Approved May 2, 1996. Effective October 1, 1996.

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