Also known as:time price differential · time-price differentials · time price differentials · time-price difference
Written by attorneys · grounded in primary & secondary sources — see below
A figure representing the difference between the current cash price of an item and the total cost of purchasing it on credit. It measures the extra amount a buyer pays when deferring payment or buying on installments rather than paying the full cash price upfront.
Sources & Authorities
How it applies
Common Examples
2
Statutory Minimum Recovery Triggered
Tiana Tan bought household appliances on an installment contract from a retailer that took a security interest in the goods. After she defaulted the retailer repossessed and sold the appliances without sending required notice of the disposition. Because the collateral was consumer goods Tiana may recover at minimum an amount that includes the time-price differential plus ten percent of the cash price even without proving any actual loss from the noncompliance.
Contractual Time-Price Figure Applied
Travis Tate financed a used vehicle through a commercial lender under a retail installment contract that stated a cash price of eight thousand dollars and a separate time-price differential of one thousand thirty-six dollars. When the lender later failed to comply with disposition rules after repossession the court calculated the statutory minimum recovery by adding the stated time-price differential to ten percent of the cash price.
How is the time-price differential used when calculating the statutory minimum recovery for noncompliance with Article 9 disposition rules?+
The time-price differential serves as one component of the fixed statutory formula that a debtor or secondary obligor may recover in any event when consumer goods collateral is involved. The formula adds the time-price differential to ten percent of the cash price and awards at least that sum once noncompliance is shown regardless of actual loss.
Does the time-price differential appear only in consumer-goods transactions under the UCC?+
The term itself describes the credit markup in any installment sale but the special minimum-recovery formula that expressly references the time-price differential applies only when the collateral consists of consumer goods and the secured party has failed to comply with the rules in Part 6 of Article 9.
Must a debtor prove actual damages to recover an amount that includes the time-price differential?+
No. Once the secured party fails to comply with the disposition rules in a consumer-goods transaction the statute awards the minimum sum that incorporates the time-price differential plus ten percent of the cash price without any requirement that the debtor prove consequential or out-of-pocket loss.
232 A.2d 405 (N.J. 1967)Contracts
…It means also that for 2-1/3 years Universal would have the use of 40% of Owen’s money on which he had been charged the high time-price differential rate. In contrast, since Universal discounted the note immediately with Unico on the strength of Owen’s credit and purchase contract, the transaction, so far as the seller is concerned, can…
Secured TransactionsDefault (§ 9-601, et seq.) · Debtor’s rights (§§ 9-625 through 9-628)UBEIntermediate