Cal. Code Regs. Tit. 10, § 943 - Finance Charge

(a) The "finance charge" for a commercial financing transaction is the sum of:

(1) For all commercial financing transactions, all charges that would be included in the finance charge under 12 C.F.R. Part 1026.4 (1-1-21 Edition), which is incorporated herein by this reference, if the transaction were a consumer credit transaction and the financer were a creditor under federal law. This paragraph is intended to require finance charges to include any charge that would be a finance charge under 12 C.F.R. Part 1026.4 , regardless of whether the transaction in question would be considered an "extension of credit" under federal law and regardless of whether the financer would be considered a "creditor" under federal law;

(2) In any accounts receivable purchase transaction that is not a factoring transaction, the discount taken on the face value of the accounts receivable;

(3) In a factoring transaction, the face value on the invoice minus the amount paid directly to the recipient upon assignment of the legally enforceable claim to the financer. For the purposes of the calculation described in the preceding sentence, if the transaction involves a reserve amount, the reserve amount shall also be subtracted from the face value on the invoice only if the financer reasonably anticipates that it will return all reserve amounts to the recipient once it has been paid for the legally enforceable claim or claims assigned by the recipient or upon termination of the contractual relationship between the financer and the recipient, properly crediting payments made by account debtors and previous collections by the financer from the recipient, all amounts held in reserve, and payments by insurers on defaulted accounts. In determining what the financer can reasonably anticipate, the financer shall consider past performance of similar contracts (both those made to the recipient and other similar recipients) and the policies and procedures of the financer; and

(4) In any lease financing transaction, the sum of lease payments (including any regular periodic payments and irregular payments) and price of the purchase option that the lessee may pay to acquire the leased goods at the end of the lease, minus the amount financed.

(b) For products where any part of the finance charge is based upon interest that accrues on the outstanding principal balance owed by the recipient, the interest charge adjusts over time, and it is not possible to calculate the interest charges in advance for the entire term of the transaction because the charge adjusts based upon a benchmark rate plus a margin, the provider shall calculate the interest charges for periods of time when the interest charge cannot be calculated in advance based upon the benchmark rate in effect at the time of disclosure and the margin.

(c) For the purposes of the calculation required by subdivision (a) of this section, a charge or amount that meets the requirements of subdivision (a)(1) and subdivisions (a)(2), (a)(3), or (a)(4) shall not be counted twice.

Notes

Cal. Code Regs. Tit. 10, § 943

Note: Authority cited: Sections 321 and 22804, Financial Code. Reference: Sections 22800, 22802, 22803 and 22804, Financial Code.

1. New section filed 6-9-2022; operative 12/9/2022 pursuant to Government Code section 11343.4(b)(2) (Register 2022, No. 23). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20.