Free Contract in Financing Act

Free Contract in Financing Act

Summary

The Free Contract in Financing Act removes restrictions on interest rates for all loans and sales, including those to both consumers and businesses, and allows borrowers and lending institutions to contract for a mutually agreeable interest rate.

Model Policy

{Title, enacting clause, etc.}

Section 1. This Act may be cited as the Free Contract in Financing Act.

Section 2. {Contracting for extension of credit.} Not withstanding any contrary provision of the law, the parties to any transaction involving the extension of credit may contract for any interest, finance charge or other consideration for such extension of credit, as agreed upon by the parties in writing.

Section 3. {Contracting for additional charges.} In addition to the interest, finance charge or consideration permitted under this Act, the parties to any such transaction may contract for such additional charges as may be agreed upon by the parties in writing.

Section 4. {Severability clause.}

Section 5. {Repealer clause.}

Section 6. {Effective date.}

 

Approved by ALEC Board of Directors on January 1995.

Reapproved by ALEC Board of Directors on January 28, 2013.

Keyword Tags: Commerce Insurance and Economic Development Task Force, Dodd-Frank, Financial Services