Civil Code section 1802.20

“Simple-interest basis” means the determination of a finance charge, other than an administrative finance charge, by applying a constant rate to the unpaid balance as it changes from time to time, either:

(a)

Calculated on the basis of a 365-day year and actual days elapsed (although the seller may, but need not, adjust its calculations to account for leap years); reference in this chapter to the “365-day basis” shall mean this method of determining the finance charge, or

(b)

For contracts entered into prior to January 1, 1988, calculated on the basis of a 360-day year consisting of 12 months of 30 days each and on the assumption that all payments will be received by the seller on their respective due dates; reference in this chapter to the “360-day basis” shall mean this method of determining the finance charge.

Source: Section 1802.20, https://leginfo.­legislature.­ca.­gov/faces/codes_displaySection.­xhtml?lawCode=CIV§ionNum=1802.­20.­ (updated Jan. 1, 1979; accessed Jul. 7, 2025).

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Verified:
Jul. 7, 2025

§ 1802.20's source at ca​.gov