A retail installment contract, which otherwise conforms to the requirements of this chapter, may contain the provision that the seller may at his option add subsequent purchases made by the buyer to the contract, and that the total price of the goods or services covered by the contract shall be increased by the price of such additional goods or services, and that all finance charges and installment payments may at the seller’s option be increased proportionately, and that all terms and conditions of the contract shall apply equally to such additional goods or services. The contract may also provide that the goods purchased under the previous contract or contracts
shall be security for the goods purchased under the subsequent contract but only until such time as the total of payments under the previous contract or contracts is fully paid.
Retail Installment SalesAdd-on Sales
Section § 1808.1
This law explains that if you have a retail installment contract with a seller, the seller can update the contract to include any future purchases you make. This means your total cost and payments might go up if you buy more items or services. Also, the seller can use the items from past purchases as collateral for new purchases until you've finished paying off the original contract.
retail installment contract subsequent purchases total price increase
Section § 1808.2
This law explains how payments are handled when you buy something on credit and then make another purchase from the same seller. It says that all your earlier payments go toward paying off the first item you bought. For new payments, they are split based on the price of each item at the time of sale. If your payment goes up because of a new purchase, you can choose how much goes to each item. Any down payment on a new item must fully go to that purchase.
The seller must also give you a breakdown before your next payment is due. This includes your and the seller's names and addresses, a description of the goods or services, prices, down payments, insurance, fees, and detailed payment terms, like how much is left to pay and how finance charges are calculated.
When a subsequent purchase is made, the entire amount of all payments made previous thereto shall be deemed to have been applied toward the payment of the previous deferred payment price or deferred payment prices. Each payment thereafter received shall be deemed to be allocated to all of the various deferred payment prices in the same proportion or ratio as the original cash sale prices of the various purchases bear to one another; where the amount of each installment payment is increased in connection with the subsequent purchase, the subsequent payments (at the seller’s election) may be deemed to be allocated as follows: an amount equal to the original payment to
the previous deferred payment price, and an amount equal to the increase, to the subsequent deferred payment price. However, the amount of any initial or downpayment on the subsequent purchase shall be deemed to be allocated in its entirety to such purchase.
When a subsequent purchase under this section is made the seller shall deliver to the buyer, prior to the due date of the first installment, a memorandum which shall set forth the following:
(a)CA Civil Law Code § 1808.2(a) The names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the goods and services sufficient to identify them. Services or multiple items of goods may be described in general terms and may be described in detail in a separate writing.
(b)CA Civil Law Code § 1808.2(b) The cash price of the goods, services and
accessories which are the subject matter of the new retail installment sale.
(c)CA Civil Law Code § 1808.2(c) The amount of the buyer’s downpayment, itemizing the amounts paid in money and in goods and containing a brief description of the goods, if any, traded in.
(d)CA Civil Law Code § 1808.2(d) The difference between item (b) and item (c) which is the unpaid balance of cash price.
(e)CA Civil Law Code § 1808.2(e) The amount of the existing outstanding balance to be consolidated, which consists of the unpaid time balance or balances of the prior contract or contracts to be consolidated.
(f)CA Civil Law Code § 1808.2(f) The amount of any unearned finance charge, determined by deducting from the amount of item (e) any then unearned finance charge in an amount not less than the refund credit provided for in Article 6 (commencing with Section 1806.1) of this chapter
(computed, however, without the allowance of any minimum earned finance charge).
(g)CA Civil Law Code § 1808.2(g) The difference between items (e) and (f), which is the net outstanding balance to be consolidated.
(h)CA Civil Law Code § 1808.2(h) The amount, if any, included for insurance, specifying the coverages.
(i)CA Civil Law Code § 1808.2(i) The amount, if any, of official fees.
(j)CA Civil Law Code § 1808.2(j) The unpaid balance, which is the sum of items (d), (g), (h) and (i).
(k)CA Civil Law Code § 1808.2(k) The finance charge (1) expressed as the annual percentage rate as defined in Regulation Z and (2) expressed in dollars, and computed in conformity with Section 1808.5.
(l)CA Civil Law Code § 1808.2(l) The number, amount, and due dates or periods of payment scheduled to repay
the indebtedness and the sum of such payments.
(m)CA Civil Law Code § 1808.2(m) Any “balloon payments” as described in Section 1807.3.
The items need not be stated in the sequence or order set forth above; additional items may be included to explain the computations made in determining the amount to be paid by the buyer. If the finance charge or any portion thereof is calculated on the 365-day basis, the amount of the finance charge shown pursuant to item (k) shall be that amount which will be incurred by the buyer if all payments are received by the seller on their respective due dates.
subsequent purchase payments allocation deferred payment price
Section § 1808.3
This law section deals with credit sales that are part of a continued agreement where new purchases are added to an existing balance. The seller must give the buyer a detailed written account before the first installment is due. This memo should include key information like the seller and buyer's details, descriptions of goods/services, the cash price, downpayment, finance charges, and payment schedule. Importantly, it requires written customer approval for interest rates and finance charge calculations. If the action involves multiple purchases, the order of payments is specified by purchase date and price. It also specifies that any finance charge calculated on a daily basis must be disclosed for prompt payment scenarios.
If a credit sale is one of a series of transactions made pursuant to an agreement providing for the addition of the amount financed plus the finance charge for the current sale to an existing outstanding balance, and the disclosures required under this article for the initial sale and each subsequent sale are delayed until some date prior to the date the first payment for that particular sale is due; and
(1)CA Civil Law Code § 1808.3(1) The customer has approved in writing both the annual percentage rate or rates and the method of treating any unearned finance charge on an existing outstanding balance in computing the finance
charge or charges; and
(2)CA Civil Law Code § 1808.3(2) The seller retains no security interest in any property as to which he has received payments aggregating the amount of the sale price including any finance charges attributable thereto; then, for the purposes of this section, in the case of items purchased on different dates, the first purchased shall be deemed first paid for, and in the case of items purchased on the same date the lowest priced shall be deemed first paid for.
When a credit sale under this section is made, the seller shall deliver to the buyer, prior to the due date of the first installment, a memorandum which shall set forth the following:
(a)CA Civil Law Code § 1808.3(a) The names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the goods and services sufficient
to identify them. Services or multiple items of goods may be described in general terms and may be described in detail in a separate writing.
(b)CA Civil Law Code § 1808.3(b) The cash price of the goods, services and accessories which are the subject matter of the new retail installment sale.
(c)CA Civil Law Code § 1808.3(c) The amount of the buyer’s downpayment, itemizing the amounts paid in money and in goods and containing a brief description of the goods, if any, traded in.
(d)CA Civil Law Code § 1808.3(d) The difference between item (b) and item (c), which is the unpaid balance of cash price.
(e)CA Civil Law Code § 1808.3(e) The amount, if any, included for insurance, specifying the coverages.
(f)CA Civil Law Code § 1808.3(f) The amount, if any, of official fees.
(g)CA Civil Law Code § 1808.3(g) The amount financed, which is the sum of items (d), (e) and (f).
(h)CA Civil Law Code § 1808.3(h) The amount of the finance charge (1) expressed as the annual percentage rate as defined in Regulation Z and (2) expressed in dollars, which is to be computed in accordance with this chapter.
(i)CA Civil Law Code § 1808.3(i) The deferred payment price, which is the sum of the amounts determined under items (b), (e), (f) and (h).
(j)CA Civil Law Code § 1808.3(j) The previous balance, which is the amount owing on prior purchases.
(k)CA Civil Law Code § 1808.3(k) The number, amount, and due dates or periods of payments scheduled to repay the indebtedness and the sum of such payments.
(l)CA Civil Law Code § 1808.3(l) Any “balloon payments,” as described in Section 1807.3.
The items need not be stated in the sequence or order set forth above; additional items may be included to explain the computations made in determining the amount to be paid by the buyer. If the finance charge or any portion thereof is calculated on the 365-day basis, the amount of the finance charge shown pursuant to item (h) shall be that amount which will be incurred by the buyer if all payments are received by the seller on their respective due dates.
credit sale agreement finance charge
Section § 1808.4
This law says that if a buyer makes an additional purchase from a seller, they only have to pay the full cash price for that item until they receive certain paperwork from the seller, known as a memorandum.
Until the seller delivers to the buyer the memorandum as provided in Sections 1808.2 and 1808.3, the buyer shall be obligated to pay only the cash price of the subsequent purchase.
seller delivery buyer payment obligation cash price
Section § 1808.5
This law section explains how to calculate the finance charge on a consolidated loan payment. Basically, it tells us that you apply the appropriate finance charge rate to what's left of the unpaid balance for the entire time until the last payment is due. This is all done according to other specific rules starting from Section 1805.1.
Subject to the other provisions of Article 5 (commencing with Section 1805.1), the finance charge to be included in a consolidated total of payments under subdivision (
consolidated loan finance charge unpaid balance
