Sec. 342.351. REFUND OF PRECOMPUTED INTEREST: SUM OF THE PERIODIC BALANCES. (a) This section applies to a loan contract that includes precomputed interest authorized under Subchapter F or G and that is a regular transaction. (b) If the contract is prepaid in full, including payment in cash or by a new loan or renewal of the loan, or if the lender demands payment in full of the unpaid balance, after the first installment due date but before the final installment due date, the lender shall refund or credit to the borrower the amount computed by: (1) dividing the sum of the periodic balances scheduled to follow the installment date after the date of the prepayment or demand, as appropriate, by the sum of all the periodic balances under the schedule of payments set out in the loan contract; and (2) multiplying the total interest contracted for under Section 342.252 or 342.301 , as appropriate, by the result under Subdivision (1). (c) If the prepayment in full or demand for payment in full occurs before the first installment due date, the lender shall: (1) retain an amount computed by: (A) dividing 30 into the amount that could be retained if the first installment period were one month and the loan were prepaid in full on the date the first installment is due; and (B) multiplying the result under Paragraph (A) by the number of days in the period beginning on the date the loan was made and ending on the date of the prepayment or demand; and (2) refund or credit to the borrower the amount computed by subtracting the amount retained under Subdivision (1) from the interest contracted for under Section 342.252 or 342.301 , as appropriate.
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