BILL NUMBER: S5213
SPONSOR: SANDERS
 
TITLE OF BILL:
An act to amend the personal property law, in relation to limiting the
amount of certain credit service charges in motor vehicle retail
installment contracts
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill would cap the amount of a credit service charge that can be
imposed on motor vehicle retail installment contracts to 16% annually.
 
SUMMARY OF PROVISIONS:
Section one of the bill amends the personal property law, as it relates
to limiting the credit service charge on motor vehicle retail install-
ment contracts to no more than sixteen dollars per hundred dollars per
year.
Section two of the bill relates to the effective date.
 
JUSTIFICATION:
In New York, motor vehicle financing are done through motor vehicle
retail installment contracts where a finance company allows the buyer to
pay for the vehicle in installments in exchange for a credit service
charge. The credit service charge is a form of interest and the retail
installment contract operates similarly to a loan but is not subject to
our usury limits. Unfortunately , these contracts are able to charge
customers interest in amounts well over the usury cap. New York consum-
ers have seen interest rates upwards of 24% for the purchase of new or
used vehicles. This extremely high amount of credit service charge has
led to consumer paying more service charge than principal for the vehi-
cle. This bill reinstates previously imposed credit service charge
limits to no more than sixteen percent; aligning with the civil usury
cap.
 
PRIOR LEGISLATIVE HISTORY:
2021-22 REFERRED TO SENATE CONSUMER PROTECTION
2021-22 referred to assembly consumer affairs and protection
2019-20 REFERRED TO SENATE CONSUMER PROTECTION
2019-20 referred to assembly consumer affairs and protection
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S5213: 303 personal property law, 303(1) personal property law