(a) Any section that refers to this section does not apply to any loan of the bona fide principal amount specified in that section, or more, if that provision is not used for the purpose of evading this chapter. In determining under §§ 884, 838, or 839 or any section that refers to this section whether a loan is a loan of a bona fide principal amount of the amount specified in that section or more and whether the regulatory ceiling provision of that section is used for the purpose of evading this chapter, the following principles apply:(a) If a borrower applies for a loan in a bona fide principal amount of less than the specified amount and a loan to that borrower of a bona fide principal amount of the specified amount or more if made by a licensed finance lender, no adequate economic reason for the increase in the size of the loan exists, and by prearrangement or understanding between the borrower and the licensee a substantial payment is to be made upon the loan with the effect of reducing the bona fide principal amount of the loan to less than the specified amount within a short time after the making of the loan other than by reason of a requirement that the loan be paid in substantially equal periodical installments, then the loan may not be deemed to be a loan of the bona fide principal amount of the specified amount or more, and the regulatory ceiling provisions must be deemed used for the purpose of evading this chapter unless the loan complies with the other provisions of the section that includes the regulatory ceiling provisions.(b) If a loan made by a licensed finance lender is in a bona fide principal amount of the specified amount or more, the fact that the transaction is in the form of a sale of accounts, chattel paper, goods, or instruments or a lease of goods, or in the form of an advance on the purchase price of any of the foregoing, may not be deemed to affect the loan or the bona fides of the amount thereof or to indicate that the regulatory ceiling provisions are used for the purpose of evading this chapter.(c) For the purposes of determining whether the loan amount exceeds a regulatory ceiling, the “bona fide principal amount” must not be comprised of any charges or any other fees or recompense specified in section 833, including, but not limited to, amounts paid for insurance of the types specified in sections 848 and 849, 833, 840, 851, 852, 856, 857, 858 and 875. Nothing in this subsection may be construed to prevent those specified charges, fees, and recompense that have been earned and remain unpaid in an existing loan from being considered as part of the bona fide principal amount of a new loan to refinance that existing loan, if the new loan is not made for the purpose of circumventing a regulatory ceiling provision. This subsection is intended to define the meaning of “bona fide principal amount” as used in this chapter solely for the purposes of determining whether the loan amount exceeds a regulatory ceiling and is not intended to affect the meaning of “principal” for any other purpose.
(a) If a borrower applies for a loan in a bona fide principal amount of less than the specified amount and a loan to that borrower of a bona fide principal amount of the specified amount or more if made by a licensed finance lender, no adequate economic reason for the increase in the size of the loan exists, and by prearrangement or understanding between the borrower and the licensee a substantial payment is to be made upon the loan with the effect of reducing the bona fide principal amount of the loan to less than the specified amount within a short time after the making of the loan other than by reason of a requirement that the loan be paid in substantially equal periodical installments, then the loan may not be deemed to be a loan of the bona fide principal amount of the specified amount or more, and the regulatory ceiling provisions must be deemed used for the purpose of evading this chapter unless the loan complies with the other provisions of the section that includes the regulatory ceiling provisions.
(b) If a loan made by a licensed finance lender is in a bona fide principal amount of the specified amount or more, the fact that the transaction is in the form of a sale of accounts, chattel paper, goods, or instruments or a lease of goods, or in the form of an advance on the purchase price of any of the foregoing, may not be deemed to affect the loan or the bona fides of the amount thereof or to indicate that the regulatory ceiling provisions are used for the purpose of evading this chapter.
(c) For the purposes of determining whether the loan amount exceeds a regulatory ceiling, the “bona fide principal amount” must not be comprised of any charges or any other fees or recompense specified in section 833, including, but not limited to, amounts paid for insurance of the types specified in sections 848 and 849, 833, 840, 851, 852, 856, 857, 858 and 875. Nothing in this subsection may be construed to prevent those specified charges, fees, and recompense that have been earned and remain unpaid in an existing loan from being considered as part of the bona fide principal amount of a new loan to refinance that existing loan, if the new loan is not made for the purpose of circumventing a regulatory ceiling provision. This subsection is intended to define the meaning of “bona fide principal amount” as used in this chapter solely for the purposes of determining whether the loan amount exceeds a regulatory ceiling and is not intended to affect the meaning of “principal” for any other purpose.