New Jersey Statutes Title 17. Corporations and Institutions for Finance and Insurance 17 § 3B-18

The periodic percentage rates of interest charged and collected with respect to a loan under a closed end credit agreement may, subject to any limitations set forth in the loan agreement, vary in accordance with the market interest rate index specified in the loan agreement, which index shall be readily verifiable by the borrower and beyond the control of the lender. Periodic percentage rate increases, based on a rise in the interest rate index, may be made at the option of the lender. Periodic percentage rate decreases shall be made whenever there is a decrease in the interest rate index which results in an interest rate which is less than the interest rate then applicable to the note or loan, except that the loan agreement may stipulate a percentage decrease below which a corresponding decrease in the periodic percentage rate need not be made by the lender, provided the index decrement shall be the same as the index increment used for interest rate increases. Interest rate increases may, and interest rate decreases shall, apply to any outstanding and unpaid loan balances on or after the effective date of the rate variation. Upon an increase in the rate of interest, the term of the note shall be extended as necessary to provide for payment of the balance due without any increase in the amount of each of the borrower's periodic payments, except that the periodic payments may be increased, if either a. the agreement so provides or the parties agree to the increase in writing, or b. if the periodic payment amounts would not be sufficient to reduce the principal amount due, the lender, no sooner than 30 days after notifying the borrower of that fact , may require that the periodic payments be increased, or that there be a combination of an extended term and increased periodic payments.