If a borrower pays back a loan early, or under certain other conditions, and the interest or fees they've paid in advance exceed the legal limit, the lender must refund or credit the excess to the borrower. Essentially, the borrower is entitled to a rebate for the extra interest or charges they've paid. The amount refunded is based on the difference between the total charges calculated at the start and what the borrower should have paid given the time the loan was actually used. If the borrower offers to pay off the remaining balance minus the rebate, the lender has to accept this as full repayment.

This law gives a loan company an alternative method for calculating and applying loan payments. Instead of the usual rule in Section 18635, the law allows for charges to be precomputed if the loan is repaid in roughly equal monthly installments starting 15 to 45 days after the loan is issued. The total charges can be calculated at the start and added to the loan principal. Each payment goes towards both the principal and these precomputed charges until the loan is fully paid. The charges for each period align with the balance due in that month relative to the entire schedule.

If you pay off a loan early, you get some money back from the loan's precomputed charges for future payments you won’t need to make. This rebate starts from after your most recent payment date. If you pay everything off by the third scheduled payment, you’ll get back the difference between all future charges and the interest already applied to your remaining balance. If you pay after that, but before the 15th day after any payment due date, it counts as if you paid right on the due date. You can pay off the whole loan early by giving the lender a check for what's left after your rebate.

When a borrower pays off three or more installments, but not the entire loan, ahead of schedule on a specific type of loan, they get a special rebate. This rebate is calculated based on the precomputed interest for the last installment period times the number of full installments paid early. The special rebate is given in addition to any other prepayment rebates when the loan ends.

This law section explains when a lender can charge a deferment fee on a loan if payments are postponed by one or more months. The deferment fee can't be more than the part of the precomputed interest linked to the first postponed payment, multiplied by the number of months the loan's due date is pushed back. The months pushed back can't exceed the number of missed payments or those due within 15 days of deferment. When a deferment fee is charged, no interest is applied to months with no payment due because of postponement. If any amount is paid at deferment, it can go towards the deferment fee first, and the remainder towards the loan balance. If the payment covers overdue payments and related fees, it won't be deferred or charged additional deferment fees.

If a loan agreement ends earlier than expected under Section 18636, the company must refund or credit the borrower just as if the loan were fully paid off at that time. After this, any remaining loan amount will be considered the main outstanding balance and will accrue charges at the rate agreed upon in the loan contract.

This law clarifies that for precomputed loans, the rules that premium finance agencies must follow are only found in this specific set of laws. It means that other laws don't apply to these types of loans for these agencies.