Legislative Analysis
Phone: (517) 373-8080
MOTOR VEHICLE INSTALLMENT CONTRACTS
http://www.house.mi.gov/hfa
House Bill 5460 (H-3) as reported from committee Analysis available at
Sponsor: Rep. Alabas Farhat http://www.legislature.mi.gov
Committee: Regulatory Reform
Complete to 5-17-24
(Enacted as Public Act 94 of 2024)
SUMMARY:
House Bill 5460 would amend the Motor Vehicle Sales Finance Act to allow the use of
installment sales contracts that require payments in unequal amounts in certain circumstances.
Specifically, the bill would allow an installment sales contract for a new motor vehicle to
provide for a series of monthly payments in unequal amounts if both of the following
conditions are met:
• The amount of any payment under the contract does not increase more than 40% from
the first scheduled payment.
• The amount of each payment under the contract does not exceed the buyer’s maximum
payment threshold, as determined by the installment seller or the sales finance company
at the time the buyer completes the contract.
New motor vehicle would mean a motor vehicle that is not and has not been a
demonstrator, an executive or manufacturer’s motor vehicle, a leased motor vehicle, or
a used or secondhand motor vehicle.
Used or secondhand motor vehicle would mean a motor vehicle to which a certificate
of title and license plates have been issued and which has been registered for use on
the highways by a consumer or dealer.
Installment sellers or sales finance companies licensed under the act would be prohibited from
charging either of the following fees on an installment sales contract that requires unequal
payment amounts:
• A fee based solely on the fact that the contract requires unequal payments.
• A fee related to the prepayment of all of the unpaid time balance under the contract due
to the resale of the motor vehicle.
The bill also would require the following notice be printed prominently, in at least 12-point
type, below the federal Truth-in-Lending disclosure box on all installment sales contracts for
new motor vehicles:
Notice: Customer should review the payment schedule to determine if the contract
requires payments in unequal amounts.
MCL 492.102 et seq.
House Fiscal Agency Page 1 of 2
BRIEF DISCUSSION:
According to committee testimony, 42 states allow the use of unequal payment installment
contracts to provide flexibility for consumers. Supporters of the bill argued that providing this
flexibility in Michigan will expand access to vehicle ownership.
FISCAL IMPACT:
House Bill 5460 would not have a fiscal impact on any units of state or local government.
POSITIONS:
Representatives of the following entities testified in support of the bill:
• Department of Insurance and Financial Services (5-14-24)
• Ford Motor Company (4-23-24)
• Michigan Auto Dealers (4-23-24)
Legislative Analyst: Alex Stegbauer
Fiscal Analyst: Marcus Coffin
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 5460 (H-3) as reported Page 2 of 2


Statutes affected:
Substitute (H-3): 492.102
House Introduced Bill: 492.102
As Passed by the House: 492.102
As Passed by the Senate: 492.102
House Concurred Bill: 492.102
Public Act: 492.102
House Enrolled Bill: 492.102