Pennsylvania Statutes Title 40 P.S. Insurance § 3308. Limitation on interest and other charges

(a) Limitations. An insurance premium finance company shall not charge, contract for, receive or collect an interest charge other than as permitted by this act.

(b) Calculation of interest. The interest is to be computed on the balance of the premiums due (after subtracting the down payment made by the insured in accordance with the insurance premium finance agreement) from the effective date of the insurance coverage, for which the premiums are being advanced, to and including the date when the final installment of the insurance premium finance agreement is payable.

(c) Limits on interest. The interest shall not exceed the interest rate as permitted for a retail installment sales contract as provided in the act of October 28, 1966 (1st Sp.Sess., P.L. 55, No. 7),  1 known as the Goods and Services Installment Sales Act, plus an additional service charge of $10 per insurance premium finance agreement which need not be refunded upon cancellation or prepayment. If the insurance policy whose premiums are being financed is for other than personal, family or household purposes then the interest shall be at the rate agreed to by the parties and stated in the premium finance agreement. The interest permitted by this subsection anticipates repayment in consecutive monthly installments equal in amount for a period of one year. For repayment in greater or lesser periods or in unequal, irregular or other than monthly installments, the interest may be computed at an equivalent effective rate having due regard for the installments as scheduled.

(d) Refunds. Notwithstanding the provisions of any insurance premium finance agreement, any insured may prepay the obligation in full at any time. In that event, he shall receive a refund credit, which refund credit shall be computed pursuant to the actuarial method. Actuarial method means the method of allocating payments made on a debt between the amount financed and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from the unpaid balance of the amount financed. Where the amount of the refund credit is less than $1, no refund need be made.