(a) Regular transactions.
  (1) If prepayment in full is made by cash, renewal, or otherwise, the authorized lender must refund or credit to the borrower the unearned interest by the refund method authorized by §83.751 of this title (relating to Scope) and identified in the loan agreement as the chosen refund method. One day earned into a month will allow the lender to earn the interest applicable to the full month.
  (2) If prepayment in full is made by cash, renewal, or otherwise, before the first installment due date, the authorized lender must compute the refund as provided by this paragraph.
    (A) If the first installment due date is 15 days or less from the date of the loan, the lender may retain for each elapsed day between the date of the loan and prepayment before the first installment due date, 1/30th of the interest that could be retained if the first installment period were one month and the loan was prepaid in full on the first installment due date. All interest in excess of such amount must be refunded or credited to the borrower.
    (B) If the first installment due date is 16 days or greater, but less than one month from the date of the loan, the lender may retain for each elapsed day between the date of the loan and prepayment before the first installment due date, 1/30th of the interest which could be retained if the first installment period were one month and the loan was prepaid in full on the first installment due date.
    (C) If the first installment due date is more than one month from the contract date, the lender may retain for each elapsed day between the date of the loan and prepayment, 1/30th of the interest which could be retained if the first installment period were one month and the loan was prepaid in full on the first installment due date. The daily charge is multiplied by the number of elapsed days up until the first installment due date.
(b) Irregular transactions or transactions with term greater than 60 months.
  (1) If prepayment in full is made by cash, renewal, or otherwise, after the first installment due date, the authorized lender must refund or credit to the borrower the unearned interest by the refund method authorized by §83.751 of this title and identified in the loan agreement as the chosen refund method. The amount of interest which may be retained by the lender as earned must be determined by use of the scheduled installment earnings method as authorized by Texas Finance Code, §342.352. If prepayment in full or demand for payment in full occurs during an installment period, the lender may retain an interest charge for previous elapsed periods and the number of days beginning after the installment due date and ending on the date of the prepayment or demand in full.
  (2) If prepayment is made in full before the first installment due date, an authorized lender may retain an interest charge for each elapsed day between the date of the loan and the date of prepayment. The interest charge may not exceed the amount of interest allowed under the true daily earnings method for the same time period.
(c) Consideration of deferment charges for interest refund calculations. To calculate the amount of the refund of unearned interest, an authorized lender must consider any installments that were deferred.

Source Note: The provisions of this §83.754 adopted to be effective November 9, 2006, 31 TexReg 8999; amended to be effective November 4, 2010, 35 TexReg 9698; amended to be effective July 10, 2014, 39 TexReg 5142