SENATE AMENDED
PRIOR PRINTER'S NOS. 3763, 4026, 4065 PRINTER'S NO. 4589
No. 2599 Session of 2002
INTRODUCED BY ALLEN, MUNDY, PHILLIPS, FAIRCHILD, RAYMOND,
ADOLPH, ARGALL, M. BAKER, BARRAR, BELARDI, BENNINGHOFF,
BOYES, BROWNE, BUNT, BUXTON, CIVERA, CLARK, CLYMER,
L. I. COHEN, COLAFELLA, CORNELL, COSTA, COY, CREIGHTON,
DAILEY, DALLY, DeLUCA, DERMODY, DeWEESE, DiGIROLAMO, EACHUS,
FEESE, FICHTER, FLICK, FORCIER, GABIG, GANNON, GEIST,
GODSHALL, GRUITZA, HABAY, HARHART, HENNESSEY, HERMAN,
HERSHEY, HESS, HORSEY, HUTCHINSON, KAISER, KENNEY, LaGROTTA,
LAUGHLIN, LAWLESS, LEH, LESCOVITZ, LUCYK, LYNCH, MAJOR,
MANDERINO, MANN, MARKOSEK, MARSICO, McCALL, McILHATTAN,
McNAUGHTON, MELIO, MICHLOVIC, MICOZZIE, NAILOR, NICKOL,
O'BRIEN, PALLONE, PERZEL, PETRARCA, PIPPY, PRESTON, READSHAW,
REINARD, ROBERTS, ROONEY, ROSS, RUBLEY, SAINATO, SANTONI,
SAYLOR, SCRIMENTI, SEMMEL, SHANER, S. H. SMITH, STABACK,
STAIRS, STERN, T. STEVENSON, R. STEVENSON, STRITTMATTER,
STURLA, SURRA, TANGRETTI, J. TAYLOR, TRELLO, TULLI, TURZAI,
VEON, WANSACZ, WILT, M. WRIGHT, YOUNGBLOOD, ZUG AND PICKETT,
APRIL 29, 2002
SENATOR HOLL, BANKING AND INSURANCE, IN SENATE, AS AMENDED,
NOVEMBER 13, 2002
AN ACT
1 Amending the act of June 28, 1947 (P.L.1110, No.476), entitled
2 "An act defining and regulating certain installment sales of
3 motor vehicles; prescribing the conditions under which such
4 sales may be made and regulating the financing thereof;
5 regulating and licensing persons engaged in the business of
6 making or financing such sales; prescribing the form,
7 contents and effect of instruments used in connection with
8 such sales and the financing thereof; prescribing certain
9 rights and obligations of buyers, sellers, persons financing
10 such sales and others; limiting incidental charges in
11 connection with such instruments and fixing maximum interest
12 rates for delinquencies, extensions and loans; regulating
13 insurance in connection with such sales; regulating
14 repossessions, redemptions, resales and deficiency judgments
15 and the rights of parties with respect thereto; authorizing
16 extensions, loans and forbearances related to such sales;
1 authorizing investigations and examinations of persons
2 engaged in the business of making or financing such sales;
3 prescribing penalties and repealing certain acts," further
4 providing for definitions, for licensing, for sanctions, for
5 administration, for records, for contracts, for assignments,
6 for insurance, for finance costs, for refinancing, for
7 default, for repossession and redemption, for prohibited
8 charges, for exemptions and for penalties.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Clauses 10, 11, 13, 14, 16 and 18 of section 3 of <--
12 the act of June 28, 1947 (P.L.1110, No.476), known as the Motor
13 Vehicle Sales Finance Act, are amended and the section is
14 amended by adding clauses to read:
15 Section 3. Definitions.--The following words, terms and
16 phrases when used in this act shall have the meaning ascribed to
17 them in this section, except where the context clearly indicates
18 otherwise:--
19 * * *
20 10. "INSTALLMENT SALE CONTRACT" OR "CONTRACT" SHALL MEAN ANY <--
21 CONTRACT FOR THE RETAIL SALE OF A MOTOR VEHICLE, OR WHICH HAS A
22 SIMILAR PURPOSE OR EFFECT UNDER WHICH PART OR ALL OF THE PRICE
23 IS PAYABLE IN TWO OR MORE SCHEDULED PAYMENTS SUBSEQUENT TO THE
24 MAKING OF SUCH CONTRACT, OR AS TO WHICH THE OBLIGOR UNDERTAKES
25 TO MAKE TWO OR MORE SCHEDULED PAYMENTS OR DEPOSITS THAT CAN BE
26 USED TO PAY PART OR ALL OF THE PURCHASE PRICE, WHETHER OR NOT
27 THE SELLER HAS RETAINED A SECURITY INTEREST IN SUCH MOTOR
28 VEHICLE OR HAS TAKEN COLLATERAL SECURITY FOR THE BUYER'S
29 OBLIGATION, AND SHALL INCLUDE ANY LOAN, ANY MORTGAGE, ANY
30 CONDITIONAL SALE CONTRACT, ANY PURCHASE-MONEY CHATTEL MORTGAGE,
31 ANY HIRE-PURCHASE AGREEMENT OR ANY CONTRACT FOR THE BAILMENT OR
32 LEASING OF A MOTOR VEHICLE UNDER WHICH THE HIRE-PURCHASER, THE
33 BAILEE OR LESSEE CONTRACTS TO PAY AS COMPENSATION A SUM
20020H2599B4589 - 2 -
1 SUBSTANTIALLY EQUIVALENT TO OR IN EXCESS OF THE VALUE OF THE
2 MOTOR VEHICLE AND ANY OTHER FORM OF CONTRACT WHICH HAS A SIMILAR
3 PURPOSE OR EFFECT: PROVIDED, HOWEVER, THAT THE TERMS SHALL NOT
4 INCLUDE ANY SALE OR CONTRACT FOR SALE UPON AN OPEN BOOK ACCOUNT,
5 WHEREIN THE SELLER HAS NOT RETAINED OR TAKEN ANY SECURITY
6 INTEREST IN THE MOTOR VEHICLE SOLD OR ANY COLLATERAL SECURITY
7 FOR THE BUYER'S OBLIGATION, AND WHEREIN THE BUYER IS NOT
8 REQUIRED TO PAY ANY SUM OTHER THAN THE CASH PRICE OF THE MOTOR
9 VEHICLE SOLD IN CONNECTION WITH SUCH SALE OR EXTENSION OF
10 CREDIT, AND WHEREIN THE BUYER IS OBLIGATED TO PAY FOR THE MOTOR
11 VEHICLE IN FULL WITHIN NINETY (90) DAYS FROM THE TIME THE SALE
12 OR CONTRACT FOR SALE WAS MADE[.]: PROVIDED ALSO THAT THE TERMS
13 SHALL NOT INCLUDE A RIGHT TO ACQUIRE POSSESSION OF GOODS
14 PURSUANT TO A LEASE UNLESS THE LEASE CONSTITUTES A SECURITY
15 INTEREST AS DEFINED IN 13 PA.C.S. § 1201 (RELATING TO GENERAL
16 DEFINITIONS) AND IS SUBJECT TO 13 PA.C.S. DIV. 9 (RELATING TO
17 SECURED TRANSACTIONS). THESE TERMS SHALL ALSO MEAN AND APPLY TO
18 ANY EXTENSION, DEFERMENT, RENEWAL OR OTHER REVISION OF SUCH
19 INSTALLMENT SALE CONTRACT.
20 11. "Cash price" shall mean the [minimum] price measured in
21 dollars at which the seller would in good faith sell to the
22 buyer or to any other buyer under like circumstances, and the
23 buyer would in good faith buy from the seller, the motor vehicle
24 which is the subject matter of the installment sale contract, if
25 such sale were a sale for cash instead of an installment sale.
26 * * *
27 13. "Principal amount financed" shall mean the unpaid cash
28 price balance after deducting the down payment, adding the [cost
29 of] charges for any insurance [premiums] required or obtained as
30 security for or by reason of the sale of a motor vehicle under
20020H2599B4589 - 3 -
1 an installment sale contract, and adding other costs or charges
2 necessary or incidental to the sale of the motor vehicle under
3 [such] an installment sale contract[, which the seller contracts
4 to pay on behalf of the buyer, and for the amount of which the
5 seller agrees to extend credit to the buyer, and for which the
6 buyer contracts voluntarily.] and amounts representing payment
7 of a prior credit or lease balance to discharge a security
8 interest, lien or lease interest on a motor vehicle or other
9 property traded or returned.
10 13.1. "Charges" shall mean the price measured in dollars in
11 which the seller would in good faith sell to the buyer or to any
12 other buyer under like circumstances, and the buyer would in
13 good faith buy from the seller, any goods and services which are
14 subject to the installment sale contract, if the sale were a
15 sale for cash instead of an installment sale.
16 13.2. "Charges for insurance" shall mean premiums,
17 commissions and other payments authorized by insurance statutes
18 or regulations of this Commonwealth.
19 14. "Finance charge" shall mean the amount of the
20 consideration in excess of the cash price which the buyer is
21 required to pay to the seller for the privilege of purchasing a
22 motor vehicle under an installment sale contract, or for the
23 credit extended by the seller to the buyer in conjunction with
24 the sale of a motor vehicle under an installment sale contract,
25 or it shall mean the differential between the cash sale price of
26 the motor vehicle and the installment sale price, exclusive of
27 charges for insurance [premium costs] and other [costs] charges
28 necessary or incidental to an installment sale and any default
29 charges, which are specifically authorized by this act to be
30 included in an installment sale contract.
20020H2599B4589 - 4 -
1 * * *
2 16. "Security interest" shall mean [any property right in
3 the motor vehicle which is the subject of an installment sale
4 contract, whenever such right is retained, to secure performance
5 of any obligation of the buyer under such contract, any
6 extension, deferment, renewal or other revision thereof and the
7 term shall include any lien or encumbrance against such motor
8 vehicle, any interest of a mortgagee in such motor vehicle, and
9 any reservation of title to such motor vehicle, whether or not
10 expressed to be absolute, whenever such title is in substance
11 retained for security only] a security interest as provided by
12 13 Pa.C.S. Div. 9 (relating to secured transactions).
13 * * *
14 18. ["Administrator"] "Department" shall mean the Department
15 of Banking of the Commonwealth [of Pennsylvania].
16 * * *
17 23. "Secretary" shall mean the Secretary of Banking of the
18 Commonwealth.
19 24. "DEBT CANCELLATION AGREEMENT" SHALL MEAN A LOAN TERM OR <--
20 CONTRACTUAL ARRANGEMENT MODIFYING LOAN TERMS LINKED TO A
21 HOLDER'S EXTENSION OF CREDIT UNDER WHICH THE HOLDER AGREES TO
22 CANCEL ALL OR PART OF A BUYER'S OBLIGATION TO REPAY AN EXTENSION
23 OF CREDIT FROM THAT HOLDER UPON THE OCCURRENCE OF A SPECIFIED
24 EVENT.
25 25. "DEBT SUSPENSION AGREEMENT" SHALL MEAN A LOAN TERM OR
26 CONTRACTUAL ARRANGEMENT MODIFYING LOAN TERMS LINKED TO A
27 HOLDER'S EXTENSION OF CREDIT UNDER WHICH THE HOLDER AGREES TO
28 SUSPEND ALL OR PART OF A BUYER'S OBLIGATION TO REPAY AN
29 EXTENSION OF CREDIT FROM THAT HOLDER UPON THE OCCURRENCE OF A
30 SPECIFIED EVENT.
20020H2599B4589 - 5 -
1 Section 2. Sections 4, 5 and 6 of the act are amended to
2 read:
3 Section 4. Licenses Required.--On and after the effective
4 date of this act no person shall engage or continue to engage in
5 this Commonwealth either as principal, employe, agent or broker;
6 1. In the business of an installment seller of motor
7 vehicles under installment sale contracts, except as authorized
8 in this act, under license issued by the [administrator]
9 department, or
10 2. In the business of a sales finance company, except as
11 authorized in this act, under license issued by the
12 [administrator] department, or
13 3. In the business of a collector-repossessor, except as
14 authorized in this act, under license issued by the
15 [administrator] department.
16 Section 5. Applications for Licenses.--
17 A. Applications for licenses under this act shall be in
18 writing, under oath, and in the form prescribed by the
19 [administrator] department.
20 B. The application shall contain the name under which the
21 business is conducted, the address of the place of business, the
22 date of registration of the fictitious or trade name, if any,
23 with the Secretary of the Commonwealth; the date and place of
24 incorporation, if the applicant is a corporation; the name and
25 residence address of the owner, if the applicant is an
26 individual owner; the name and residence address of all owners,
27 partners or members, if the applicant is a partnership or
28 association; the name and address of all officers and directors,
29 if the applicant is a corporation, and such other information as
30 the [administrator] department may require.
20020H2599B4589 - 6 -
1 C. All applications filed by associations or corporations
2 shall be accompanied by a power of attorney showing the name and
3 address of the authorized agent in the Commonwealth of
4 Pennsylvania upon whom all judicial and other process or legal
5 notice may be served, and in the case of the death, removal from
6 the Commonwealth or any legal disability or disqualification of
7 such agent, service of such process or notice upon the
8 [administrator] department shall be authorized.
9 D. A separate application, on the prescribed form, shall be
10 filed for each place of business conducted by or to be
11 established by a licensee within the Commonwealth of
12 Pennsylvania.
13 E. All applications for renewal licenses shall be filed at
14 least fifteen (15) days prior to October first, annually.
15 Section 6. License; Bonds.--
16 A. A bond, in the form prescribed by the [administrator]
17 department, in the penal sum of five thousand dollars ($5,000),
18 shall accompany every application for license as a sales finance
19 company and for license as a collector-repossessor. Such bond
20 shall be executed by a surety company authorized by the laws of
21 Pennsylvania to transact business within this Commonwealth:
22 Provided, That the bond accompanying an application for license
23 as a sales finance company, filed by a banking institution
24 located within this Commonwealth, may be executed by such
25 banking institution on its own behalf, in lieu of a bond
26 executed by a surety company. The bond shall be executed to the
27 Commonwealth of Pennsylvania and shall be for the use of the
28 Commonwealth and for any person or persons. The condition of the
29 bond shall be that the licensee will comply with and abide by
30 all the provisions of this act, and all the rules and
20020H2599B4589 - 7 -
1 regulations of the [administrator] department lawfully issued,
2 and that the licensee will pay to the Commonwealth, to the
3 [administrator] department or to any person or persons, any and
4 all moneys that may become due to the Commonwealth, to the
5 [administrator] department or to any person or persons from the
6 said licensee under and by virtue of the provisions of this act.
7 If any person shall be aggrieved by the misconduct of a licensee
8 and shall recover judgment against such licensee, such person
9 may, on any execution issued under such judgment, maintain an
10 action upon the bond of the licensee in any court having
11 jurisdiction of the amount claimed, provided the [administrator]
12 department assents thereto.
13 B. A bond in the form prescribed shall be filed for each
14 place of business conducted by a finance company and for each
15 place of business conducted by a collector-repossessor within
16 the Commonwealth of Pennsylvania.
17 C. A new bond shall accompany every application for renewal
18 license and shall be filed at least fifteen (15) days prior to
19 October first, annually.
20 Section 3. Section 7 of the act, amended December 22, 1977
21 (P.L.345, No.101), is amended to read:
22 Section 7. License Fees.--
23 A. Each application for license shall be accompanied by a
24 license fee [in the amount of:-- <--
25 1. Twenty-five dollars ($25) for license as an installment
26 seller of motor vehicles.
27 2. One hundred fifty dollars ($150) for license as a sales
28 finance company.
29 3. One hundred fifty dollars ($150) for license as a
30 collector-repossessor.] AS SET FORTH IN SECTION 603-A OF THE ACT <--
20020H2599B4589 - 8 -
1 OF APRIL 9, 1929 (P.L.177, NO.175), KNOWN AS "THE ADMINISTRATIVE
2 CODE OF 1929."
3 B. A separate license fee of like amount shall be paid for
4 each place of business conducted by a licensee within the
5 Commonwealth of Pennsylvania.
6 C. No abatement in the amount of the said license fee shall
7 be made if the license is issued for less than one year, or if
8 the license is surrendered, cancelled or revoked prior to the
9 expiration of the license year for which such license was
10 issued.
11 D. All licenses under this act shall expire on October
12 first, annually. A renewal license fee in the same amount shall
13 be paid annually on or before October first for each respective
14 type of license and for each place of business.
15 E. All license fees and fines received by the
16 [administrator] department under this act shall be deposited in
17 the State Treasury to the credit of a special fund for the use
18 of the [administrator] department in administering this and
19 other laws of the Commonwealth placed under [his] its
20 administration.
21 Section 4. Section 8 of the act is amended to read:
22 Section 8. Approval of Licenses and Issuance of Licenses.--
23 A. [The administrator, if he] If the department approves an
24 application for license, it shall issue to the applicant a
25 license certificate showing the name of the person authorized to
26 do business thereunder and the address of the licensee. Such
27 license certificate when issued to an installment seller or to a
28 sales finance company shall be posted in a conspicuous place in
29 the place of business of the licensee, so that it will be in
30 full view of the public at all times; and when issued to a
20020H2599B4589 - 9 -
1 collector-repossessor shall be carried in the immediate
2 possession of the licensee whenever he is engaged in the type of
3 business for which the license is issued, so that it may be
4 presented for inspection upon request of any person entitled to
5 such inspection.
6 B. A license shall not be transferred or assigned.
7 C. A licensee may change his place of business to another
8 location within the same municipality for which the license
9 certificate was issued. A licensee desiring to change the
10 address of his place of business shall give prior written notice
11 thereof to the [administrator] department and shall return the
12 license certificate to the [administrator] department for
13 amendment. The [administrator] department shall amend the
14 license certificate to show the new address and the date
15 thereof, which shall thereafter be the authorized address of the
16 licensee. A licensee shall not be required to pay any charge for
17 amendment of a license certificate to effect change of address.
18 D. Only one place of business may be operated under the same
19 license: Provided, however, That where every place of business
20 is conducted under one name and the business records are kept in
21 one place only one license shall be required. This proviso shall
22 apply only to installment sellers. A licensee may operate more
23 than one place of business by filing an application on the
24 prescribed form for each additional place of business and by
25 furnishing a bond for each additional place of business in the
26 case of a sales finance company and collector-repossessor and by
27 paying the respective license fee provided in this act for each
28 additional place of business.
29 Section 5. Section 9 of the act, repealed in part April 28,
30 1978 (P.L.202, No.53), is amended to read:
20020H2599B4589 - 10 -
1 Section 9. Rejection of Application.--
2 A. The [administrator] department may reject any application
3 for license or any application for renewal of a license if [he] <--
4 it is not satisfied that the financial responsibility, [IF HE] <--
5 BECAUSE OF ANY OF THE FOLLOWING:
6 (1) IF THE APPLICANT HAS MADE A MATERIAL MISSTATEMENT IN THE
7 APPLICATION.
8 (2) FOR ANY OF THE GROUNDS STATED IN SECTION 10A.
9 (3) IF THE DEPARTMENT IS NOT SATISFIED THAT THE FINANCIAL
10 RESPONSIBILITY, character, reputation, integrity and the general
11 fitness of the applicant and of the owners, partners or members
12 thereof, if the applicant be a partnership or association, and
13 of the officers and directors, if the applicant be a
14 corporation, are such as to command the confidence of the public
15 and to warrant the belief that the business for which
16 application for license is filed will be operated lawfully,
17 honestly, fairly and within the legislative intent of this act
18 and in accordance with the general laws of this Commonwealth:
19 Provided, however, That no license may be issued if the
20 applicant, any affiliate, owner, partner, member, officer,
21 director, employe, agent or spouse of the applicant has pleaded
22 guilty, entered a plea of nolo contendere, or has been found
23 guilty by a judge or a jury for engaging in any business for
24 which a license is required under this act without having
25 obtained a license under this act, or if the applicant, any
26 affiliate, owner, partner, member, officer, director, employe,
27 agent or spouse of the applicant has pleaded guilty, entered a
28 plea of nolo contendere, or has been found guilty by a judge or
29 a jury of a second offense violation of this act under the penal
30 section of this act applicable to licensees and had its license
20020H2599B4589 - 11 -
1 revoked.
2 C. Whenever the [administrator] department rejects an
3 application for license, [he] it shall return the license fee
4 which accompanied the application: Provided, however, All or any
5 portion of the license fee may be retained by the
6 [administrator] department if rejection is based wholly or
7 partially upon false information furnished by the applicant in
8 the application.
9 Section 6. Section 10 of the act, amended December 17, 1982
10 (P.L.1389, No.318), is amended to read:
11 Section 10. Revocation or Suspension of Licenses.--
12 A. The [administrator] department, upon thirty (30) days'
13 written notice to the licensee, forwarded by registered mail to
14 the place of business of such licensee, as shown in the
15 application for license or as amended on the license certificate
16 in case of change of address subsequent to issuance of the
17 license certificate, may revoke or suspend any license if [he]
18 it finds that:
19 1. The licensee has made any material misstatement in the
20 application for license, or that
21 2. The licensee has violated any provision of this act, or
22 that
23 3. The licensee has violated any rule or regulation issued
24 by the [administrator] department under and within the authority
25 of this act, or that
26 4. The licensee has failed to comply with any demand, rule
27 or regulation lawfully made by the [administrator] department
28 under and within the authority of this act, or that
29 5. The licensee refuses or has refused to permit the
30 [administrator or his designated representative] department to
20020H2599B4589 - 12 -
1 make examinations authorized by this act, or that
2 6. The licensee in the case of a finance company and
3 collector-repossessor has failed to maintain in effect the bond
4 required under the provisions of this act, or that
5 7. The licensee has failed to maintain satisfactory records
6 required by this act or prescribed by the [administrator]
7 department, or that
8 8. The licensee has falsified any records required by this
9 act to be maintained of the business contemplated by this act,
10 or that
11 9. The licensee has failed to file any report with the
12 [administrator] department within the time stipulated in this
13 act, or that
14 10. The licensee has failed to pay the fine required by this
15 act for failure to file reports to the [administrator]
16 department within the time stipulated, or that
17 11. The licensee has defrauded any retail buyer to the
18 buyer's damage or wilfully failed to perform any written
19 agreement with any retail buyer, or that
20 12. Any fact or condition exists or is discovered which, if
21 it had existed or had been discovered at the time of filing of
22 the application for such license, would have warranted the
23 [administrator] department in refusing to issue such license.
24 13. The licensee has:
25 (i) failed to collect any tax or fee due the
26 Commonwealth upon any sale of a vehicle;
27 (ii) collected any such tax or fee and failed to issue a
28 true copy of the tax report to the purchaser, as required by
29 law;
30 (iii) issued a false or fraudulent tax report or copy
20020H2599B4589 - 13 -
1 thereof; or
2 (iv) failed to pay any tax or fee over to the
3 Commonwealth at the time and in the manner required by law.
4 14. The licensee has engaged in unfair, deceptive,
5 fraudulent or illegal practices or conduct in connection with
6 any business regulated under this act, including making
7 excessive mark-ups to charges for items described in section
8 14B1, 5, 10 or 18E 10.1 OR SECTION 18E or mark-ups of costs in <--
9 violation of section 18D. The department shall adopt as a <--
10 statement of policy THAT CONTAINS guidelines determining mark- <--
11 ups that the department finds, after reasonably considering
12 relevant market data, not to be excessive and shall update and
13 revise the statement of policy to reflect changing business
14 conditions. Mark-ups consistent with the guidelines shall not be
15 deemed excessive. Mark-ups in excess of the guidelines and,
16 until such time as the department adopts its guidelines, mark-
17 ups FOR SERVICE CONTRACTS, WARRANTIES, DEBT CANCELLATION <--
18 AGREEMENTS AND DEBT SUSPENSION AGREEMENTS in excess of 100% of
19 the cost to the dealer shall be deemed excessive. Such excessive <--
20 mark-ups shall be deemed an unfair or deceptive act or practice
21 as defined by the act of December 17, 1968 (P.L.1224, No.387),
22 known as the "Unfair Trade Practices and Consumer Protection
23 Law," if the licensee is in violation of this paragraph and the
24 department fails to proceed against the licensee.
25 B. The [administrator] department may revoke or suspend only
26 the particular license with respect to which grounds for
27 revocation may occur or exist, but if [he] the department finds
28 that grounds for revocation are of general application to all
29 places of business or to more than one place of business
30 operated by a licensee, [he] it may revoke all of the licenses
20020H2599B4589 - 14 -
1 issued to such licensee or those licenses to which grounds for
2 revocation apply, as the case may be.
3 C. Whenever a license has been revoked, the [administrator]
4 department shall not issue another license to the licensee
5 pursuant to the provisions of this act until the expiration of
6 at least one (1) year from the effective date of revocation of
7 said license; and not at all, if such licensee or any owner,
8 partner, member, officer, director, employe, agent or spouse of
9 the licensee shall have pleaded guilty, entered a plea of nolo
10 contendere, or has been found guilty by a judge or a jury of a
11 second offense violation of this act.
12 D. Appeals may be taken from the action of the
13 [administrator] department in suspending and revoking licenses
14 or imposing civil penalties under subsection D of section 37 in
15 accordance with the procedure prescribed by [the act of June 4,
16 1945 (Pamphlet Laws 1388), known as "The Administrative Agency
17 Law."] 2 Pa.C.S. Chs. 5 Subch. A (relating to practice and
18 procedure of Commonwealth agencies) and 7 Subch. A (relating to
19 judicial review of Commonwealth agency action).
20 Section 7. Section 11 of the act, repealed in part April 28,
21 1978 (P.L.202, No.53), is amended to read:
22 Section 11. Authority of [Administrator] Department.--
23 A. The [administrator and any person designated by him for
24 that purpose] department is empowered to investigate, at any
25 time, the business and affairs and examine the books, accounts,
26 papers, records, documents and files of every licensee and of
27 every person who shall be engaged in business contemplated by
28 this act, whether such person shall act, or claim to act, as
29 principal, agent or broker or under or without the authority of
30 this act. For this purpose the [administrator] department shall
20020H2599B4589 - 15 -
1 have free access to the offices and places of business, books,
2 accounts, papers, records, documents and files of all such
3 persons. A person who is not licensed under this act shall be
4 presumed to be engaged in business contemplated by this act, if
5 he, as principal, agent or broker advertises or solicits
6 business for which a license is required by the provisions of
7 this act, and the [administrator and any person designated by
8 him for that purpose] department is, in such cases, hereby
9 empowered to examine the books, accounts, papers, records,
10 documents, files, safes and vaults of such persons for the
11 purpose of discovering violations of this act.
12 B. The [administrator] department is empowered to require
13 the attendance and testimony of witnesses and the production of
14 any books, accounts, papers, records, documents and files
15 relating to such business which the [administrator] department
16 has authority by this act to investigate, and for this purpose
17 the [administrator] secretary or [his] a duly authorized
18 representative may sign subpoenas, administer oaths and
19 affirmations, examine witnesses and receive evidence. In case of
20 disobedience of any subpoena or the contumacy of any witness
21 appearing before the [administrator] department, the
22 [administrator] secretary may invoke the aid of the courts, and
23 such court shall thereupon issue an order requiring the person
24 subpoenaed to obey the subpoena, or to give evidence, or to
25 produce books, accounts, papers, records, documents and files
26 relative to the matter in question. Any failure to obey such
27 order of the court may be punished by such court as a contempt
28 thereof.
29 C. The expenses incurred by the department in connection
30 with any examination or investigation, whether regular or <--
20020H2599B4589 - 16 -
1 special, including a proportionate part of the salary of any
2 examiner or other employe of the department engaged in the
3 examination or investigation and all counsel assigned by the
4 department to an examination or investigation, may be assessed
5 by the department upon the particular institution PERSON <--
6 examined or investigated.
7 Section 8. Section 12 of the act is amended to read:
8 Section 12. Records Required.--
9 A. Every licensee shall maintain, at the place of business
10 designated in the license certificate, such books, accounts and
11 records of the business conducted under the license issued for
12 such place of business as will enable the [administrator]
13 department to determine whether the business of the licensee
14 contemplated by this act is being operated in accordance with
15 the provisions of this act.
16 B. A licensee, operating two or more licensed places of
17 business in this Commonwealth, may maintain the general control
18 records of all such offices at any one of such offices, or at
19 any other office maintained by such licensee, upon the filing of
20 a written request with the [administrator] department
21 designating therein the office at which such control records are
22 maintained and upon approval of such request by the
23 [administrator] department.
24 C. All books, accounts and records of licensees shall be
25 maintained in the English language.
26 D. All books, accounts and records of licensees, including
27 any cards used in a card system, shall be preserved and
28 available for examination by the [administrator] department for
29 at least two (2) years after making the final entry therein.
30 E. The [administrator] department is hereby authorized and
20020H2599B4589 - 17 -
1 empowered to prescribe the minimum information to be shown in
2 the books, accounts and records of licensees so that such
3 records will enable the [administrator] department to determine
4 compliance with the provisions of this act.
5 Section 9. Section 13 of the act, amended May 2, 1949
6 (P.L.812, No.211) and June 11, 1992 (P.L.307, No.55), is amended
7 to read:
8 Section 13. Requirements as to Contracts and Separate
9 Disclosure.--
10 A. Every installment sale contract shall be in writing and
11 shall contain all of the agreements between the buyer and the
12 seller relating to the installment sale of the motor vehicle
13 sold and shall be signed by both the buyer and the seller.
14 B. Every installment sale contract shall be completed as to
15 all essential provisions prior to the signing of such contract
16 by the buyer.
17 C. An exact copy of the installment sale contract shall be
18 furnished by the seller to the buyer at the time the buyer signs
19 such contract. Such buyer's copy of the contract shall contain
20 the signature of the seller identical with such signature on the
21 original contract. Such copy shall be furnished to the buyer
22 without charge.
23 D. Every installment sale contract shall contain the
24 following notice, printed prominently and in the form indicated
25 in twelve (12) point type, or larger, directly above the space
26 provided in the contract form for the signature of the buyer:
27 "Notice to Buyer.
28 Do not sign this contract in blank.
29 You are entitled to an exact copy of the contract you sign.
30 Keep it to protect your legal rights."
20020H2599B4589 - 18 -
1 Provided, That in lieu of the word "Buyer" there may be
2 substituted either of the words "Lessee" or "Mortgagor" and in
3 lieu of the word "contract" there may be substituted either of
4 the words "lease" or "mortgage."
5 E. The seller shall obtain from the buyer a written
6 acknowledgment of the delivery of the copy of the contract to
7 the buyer. Such acknowledgment shall be printed in twelve (12)
8 point type, or larger, and, if attached to the contract, it
9 shall be printed below the buyer's signature to the contract and
10 shall be independently signed.
11 F. Every installment sale contract shall provide for payment
12 of the time balance in substantially equal periods and in
13 substantially equal amounts except:
14 1. When the buyer expects his income to vary because of
15 seasonal employment, seasonal sales, use of accelerated
16 depreciation for tax purposes or other known cause, the contract
17 may provide for payment of the time balance in amounts which
18 vary with such expected varying income.
19 2. An installment sale contract for the sale of a heavy
20 commercial motor vehicle shall be exempt from the requirement
21 that payments must be for substantially equal periods and in
22 substantially equal amounts.
23 3. An installment sale of a new motor vehicle to a bona fide
24 salesman or of motor vehicles to be used by him principally as a
25 demonstrator shall be exempt from the equal payment schedule
26 requirement of this section.
27 4. Where the installment sale contract provides for fixed
28 residual value financing. As used in this clause, "fixed
29 residual value financing" shall mean the manner of purchase
30 whereby a buyer who is listed as the owner on the title of the
20020H2599B4589 - 19 -
1 vehicle agrees to select and perform, at the conclusion of a
2 predetermined schedule of installment payments made in
3 substantially equal periods and in substantially equal amounts,
4 one of the following options:
5 (a) satisfy the balance of the contractual amount owing;
6 (b) refinance any balance owing on the terms previously
7 agreed upon at the time of executing the installment sale
8 contract; or
9 (c) surrender the motor vehicle at such time and manner
10 agreed upon at the time of executing the installment sale
11 contract.
12 G. Prior to the execution of an installment sale contract by
13 any party, the seller shall provide to the applicant buyer both
14 an oral disclosure and a written disclosure in plain language
15 separate from the installment sale contract to be signed by the
16 applicant buyer prior to the signing of the installment sale
17 contract. The executed, written disclosure shall be copied
18 exactly and furnished by the seller to the applicant buyer at no
19 cost at the time the buyer receives a copy of the installment
20 sale contract. The separate disclosure required under this
21 subsection shall:
22 1. Advise the applicant that the buyer's purchase of
23 incidental SPECIFIC items related to acquiring the motor <--
24 vehicle, including INCIDENTAL items such as service contracts, <--
25 warranties, debt cancellation agreements, DEBT SUSPENSION <--
26 AGREEMENTS and insurance products not required by section 17,
27 but excluding options and accessories physically attached to the
28 vehicle, is voluntary and is not required as a condition of the
29 applicant buyer's receiving the installment sale contract loan.
30 2. Be complete without any blank spaces.
20020H2599B4589 - 20 -
1 Section 10. Subsections B, C and E of section 14 of the act,
2 amended April 4, 1990 (P.L.110, No.25), are amended and the
3 section is amended by adding a subsection to read:
4 Section 14. Contents of Contract and Disclosure
5 Requirements.
6 * * *
7 B. Every installment sale contract shall set forth clearly
8 and conspicuously in writing the following separate items as
9 such and [in the following order] other information as
10 applicable:
11 1. Cash price of the motor vehicle. This amount may include
12 any taxes, charges for delivery, [cost of] charges for
13 servicing, repairing or improving the motor vehicle, [costs of]
14 charges for service contracts and warranties which alternatively
15 shall be disclosed pursuant to clause 5, charges for accessories
16 and installation or other [costs] charges normally included in
17 the delivered cash price of such motor vehicle. The cash price
18 of the motor vehicle otherwise may not include charges required
19 to be disclosed pursuant to clause 5. If the cash price contains
20 charges for service contracts or warranties, then, adjacent to
21 the "cash price" listed on the contract in type print size not
22 smaller than the type size used for all item categories, shall
23 be included the boldface and underlined words or substantially
24 similar words "including optional service contracts and/or
25 warranties in the amount of"; and then the separately itemized
26 charges for the service contract and warranty shall be
27 specifically stated in the contract and warranty items.
28 2. Down payment made by the buyer at the time of or prior to
29 execution of the contract, indicating whether made in cash, or
30 represented by the agreed value of a "trade-in" motor vehicle,
20020H2599B4589 - 21 -
1 or other goods, or both. The amount of cash and/or the value of
2 any "trade-in" shall be shown separately. A description of the
3 "trade-in," if any, sufficient for identification shall be
4 shown.
5 3. Unpaid cash balance which shall be the difference between
6 the cash price (Item 1) and the down payment (Item 2) above.
7 4. [Insurance premium costs] Charges for insurance the
8 payment of which the seller agrees to extend credit to the
9 buyer. The term of such insurance, a concise description of the
10 coverage and the amount of the premium shall be set forth. If
11 the precise [cost of the] charges for insurance [is] are not
12 available at the time the contract is signed, an estimated
13 amount, ascertained from a chart prepared by the licensee and
14 approved by the [administrator] department, may be set forth in
15 the contract. When the [cost of the] charges for insurance [is]
16 are so estimated, the contract shall so state and it shall
17 contain notice to the buyer that the difference between the
18 estimated [cost] charges and the actual [cost of] charges for
19 the insurance, including finance charges on such amount, will be
20 adjusted at the time of the final payment on the contract, and a
21 statement of the amount of the adjustment shall be furnished to
22 the buyer simultaneously with the delivery of the insurance
23 policy or certificate.
24 5. Other [costs] charges, necessary or incidental to the
25 sale or financing of a motor vehicle, which the seller contracts
26 to retain, receive or pay on behalf of the buyer and [for the
27 amount of] any other charges necessary or incidental to the sale
28 or financing of the motor vehicle under the contract for which
29 the seller agrees to extend credit to the buyer as authorized by
30 this act[. Such costs shall be itemized in the contract as to
20020H2599B4589 - 22 -
1 nature and amount.], including charges for debt cancellation
2 agreements AND DEBT SUSPENSION AGREEMENTS. <--
3 6. Principal amount financed which shall be the total of the
4 unpaid cash price balance (Item 3) plus [the] charges for
5 insurance [premium costs] (Item 4) plus other [costs] charges
6 (Item 5) for which the seller agrees to extend credit to the
7 buyer.
8 7. Finance charge which is the consideration in excess of
9 the cash price (Item 1), excluding [insurance premium] charges
10 for insurance (Item 4), and other [costs] charges (Item 5),
11 which the buyer agrees to pay to the seller for the privilege of
12 purchasing the motor vehicle under the installment sale
13 contract.
14 8. Time balance which shall be the total of the principal
15 amount financed (Item 6), plus the finance charge (Item 7), and
16 which shall represent the total obligation of the buyer which he
17 agrees to pay in two or more scheduled payments.
18 9. Payment schedule which shall state the number of
19 payments, the amount of the payments and the time of the
20 payments required to liquidate the time balance.
21 10. Notwithstanding any provisions of this act or any other
22 law to the contrary, the finance charge percentage rate included
23 in an installment sale contract for the sale of a heavy
24 commercial motor vehicle may vary during the term thereof
25 pursuant to a formula or index set forth therein that is made
26 readily available to and verifiable by the buyer and is beyond
27 the control of the holder of the contract. For the purpose of
28 disclosing the amount of finance charge (Item 7) and time
29 balance (Item 8) and setting forth a payment schedule (Item 9),
30 such amounts may be calculated using the finance charge
20020H2599B4589 - 23 -
1 percentage rate applicable to the transaction as of the date of
2 execution of the contract, notwithstanding the fact that such
3 finance charge percentage rate may increase or decrease over the
4 term of the contract according to a formula or index set forth
5 in the contract.
6 10.1. Charges for warranties, charges for service contracts,
7 charges for insurance for each policy of insurance required to
8 be disclosed pursuant to clause 4, charges required to be
9 disclosed pursuant to clause 5 and costs and charges authorized
10 in section 18 shall be separately itemized in the contract as to
11 nature and amounts of the cost or charge to the buyer. If the
12 seller retains a portion of the charge of a good or service
13 which is provided by others, the seller shall disclose that the
14 seller may retain a portion of the charges.
15 C. Every installment sale contract shall [state clearly any
16 collateral security taken for the buyer's obligation under the
17 contract] provide a description that reasonably identifies any
18 collateral security in which a security interest is provided to
19 secure the buyer's obligation pursuant to 13 Pa.C.S. § 9108
20 (relating to sufficiency of description), including the motor
21 vehicle and any other collateral.
22 * * *
23 E. Every installment sale contract shall contain specific
24 provisions as to the holder's right to accelerate the maturity
25 of the contract upon default or other breach of contract and as
26 to the buyer's liability respecting nonpayment, the dollar or
27 percentage amount of any default charges which may be imposed
28 due to a late payment, other than a deferral or extension
29 charge, repossession and sale of the motor vehicle, in case of
30 default or other breach of contract, and respecting the
20020H2599B4589 - 24 -
1 collateral security, if any.
2 * * *
3 G. Charges enumerated in this section and costs and charges
4 authorized by section 18 shall be separately itemized in the
5 contract.
6 Section 11. Section 16 of the act, amended November 19, 1959
7 (P.L.1529, No.539), is amended to read:
8 Section 16. Transfer of Installment Sale Contract.--
9 A. The seller of a motor vehicle under an installment sale
10 contract, executed in the Commonwealth of Pennsylvania, shall
11 not sell, transfer or assign the obligation represented by such
12 contract to any person in Pennsylvania, or elsewhere, who is not
13 licensed as a sales finance company pursuant to the provisions
14 of this act.
15 B. A sales finance company, licensed pursuant to the
16 provisions of this act, shall not sell, transfer or assign the
17 obligation represented by a motor vehicle installment sale
18 contract, executed in the Commonwealth of Pennsylvania, which it
19 has lawfully acquired, to any other person in Pennsylvania, or
20 elsewhere, who is not licensed as a sales finance company
21 pursuant to the provisions of this act.
22 C. Whenever an installment sale contract is lawfully sold,
23 transferred or assigned to a person who is licensed as a sales
24 finance company, pursuant to the provisions of this act, [such]
25 until the new holder [shall furnish] furnishes to the buyer in
26 such contract a written notice of such sale, transfer or
27 assignment[, excepting when assignment is made only to secure a
28 bona fide commercial loan. Such notice shall set] that sets
29 forth the name and address of the new holder [and shall notify
30 the buyer of the name and address of the person] authorized to
20020H2599B4589 - 25 -
1 receive future payments on such contract[. If such notice has
2 not been given], any payment or tender of payment made to and
3 any service of notice on the last known holder by the buyer
4 shall be binding upon any subsequent holder.
5 D. The provisions of this section shall not apply to an
6 assignment of an aggregation of installment sale contracts,
7 which is executed by a seller or sales finance company only as
8 [collateral security for] a security interest securing payment
9 or performance of a bona fide commercial loan, obtained at
10 lawful rates of interest from a person regularly engaged in the
11 business of lending money on the security of such assigned
12 collateral or amounts due pursuant to a security or debt
13 instrument, and under which, in the absence of default or other
14 bona fide breach of the loan contract, ownership of the assigned
15 contracts remains vested in the assignor and collection of
16 payments on such assigned contracts is made by the assignor; And
17 provided, such assignment and loan contracts are not for the
18 purpose of evading or circumventing the provisions of this act.
19 E. Whenever an installment sale contract, which has been
20 lawfully acquired by a sales finance company, is in default, the
21 holder may resell, retransfer or reassign such contract to the
22 installment seller from whom such contract was originally
23 acquired. [Such] Until the new holder [shall furnish] furnishes
24 to the buyer in such contract a written notice of such resale,
25 retransfer or reassignment[. Such notice shall set] which sets
26 forth the name and address of the new holder[, shall notify the
27 buyer of the name and address of the person] authorized to
28 receive future payments on such contract, and [shall set forth]
29 the unpaid time balance and the accrued default charges due
30 under the contract[,] if any, any payment or tender of payment
20020H2599B4589 - 26 -
1 made to and any service of notice on the last known holder by
2 the buyer shall be binding upon any subsequent holder.
3 Section 12. Sections 17 and 18 of the act are amended to
4 read:
5 Section 17. Insurance.--
6 A. The buyer of a motor vehicle under an installment sale
7 contract may be required to provide insurance on such motor
8 vehicle at the buyer's expense for the protection of the seller
9 or subsequent holder. Such insurance shall be limited to
10 insurance against substantial risk of damage, destruction or
11 theft of such motor vehicle: Provided, however, The foregoing
12 shall not interfere with the liberty of contract of the buyer
13 and seller to contract for other or additional insurance as
14 security for or by reason of the obligation of the buyer, and
15 inclusion of [the cost of] charges for such insurance [premium]
16 in the principal amount advanced under the installment sale
17 contract. Such insurance shall be written for the dual
18 protection of the buyer and of the seller, or subsequent holder,
19 to the extent of his interest in the motor vehicle. Such
20 insurance shall be for an amount, and period of time, and upon
21 terms and conditions, which are reasonable and appropriate
22 considering the type and condition of the motor vehicle, the
23 amount of the time balance and the schedule of payments in the
24 installment sale contract.
25 B. The buyer of a motor vehicle under an installment sale
26 contract shall have the privilege of purchasing such insurance
27 from an agent or broker of his own selection and selecting an
28 insurance company acceptable to the seller: Provided, however,
29 The inclusion of [the cost of the] charges for insurance
30 [premium] in the installment sale contract, when the buyer
20020H2599B4589 - 27 -
1 selects the company agent or broker, shall be optional with the
2 seller.
3 C. Whenever the seller contracts to purchase, at the buyer's
4 expense, such insurance on a motor vehicle sold under an
5 installment sale contract, such insurance shall be purchased
6 through an agent and/or broker, authorized to conduct business
7 in Pennsylvania, and such insurance shall be written by an
8 insurance company qualified to do business in Pennsylvania. The
9 status of the buyer and seller or holder, as set forth in such
10 insurance contract, shall conform to the status of these parties
11 in the installment sale contract. The [cost of the premium on
12 such] charges for insurance to the buyer shall not be in excess
13 of the [amount of the premium] charges for insurance which
14 others are required to pay to such insurance company for similar
15 coverage, and in no event in excess of [rates established in the
16 then current published applicable manual of a recognized
17 standard insurance rating bureau, or the rates fixed] any
18 limitations on premiums, commissions and other charges
19 established by authority of the Commonwealth of Pennsylvania.
20 D. Whenever the seller contracts to purchase, at the buyer's
21 expense, such insurance on a motor vehicle sold under an
22 installment sale contract, a copy of the policy or a certificate
23 of insurance shall be delivered to the buyer within thirty (30)
24 days of the date of the buyer's signing of the installment sale
25 contract.
26 E. The insurance policy which is furnished to the buyer when
27 the insurance is placed by the seller, or subsequent holder, at
28 the buyer's expense shall set forth complete information as to
29 the effective dates, amounts of premiums and coverage, and shall
30 contain all the terms of the insurance contract. When a
20020H2599B4589 - 28 -
1 certificate of insurance issued under a master policy is
2 furnished to the buyer in lieu of an individual policy, such
3 certificate shall set forth all information as to effective
4 dates, amounts of premiums and coverage, and shall contain all
5 the terms of the insurance contract embodied in the master
6 policy to the same extent as would appear if an individual
7 policy were issued, and shall give due notice that it is not an
8 insurance policy.
9 F. When the seller or subsequent holder has placed, at the
10 expense of the buyer, insurance on a motor vehicle sold under an
11 installment sale contract and the buyer prepays the time balance
12 under the contract prior to the expiration date of the
13 insurance, such insurance shall remain in force unless the buyer
14 requests cancellation thereof. The seller or holder shall not
15 cancel the insurance under such circumstances without the
16 buyer's consent, nor shall the seller or holder coerce the buyer
17 to cancel the insurance. Unexpired insurance premiums received
18 by the seller or holder, resulting from cancellation of
19 insurance which was originally placed at the buyer's expense,
20 shall be paid to the buyer or credited to any matured unpaid
21 installments under the contract.
22 G. When the seller contracts to purchase insurance at the
23 buyer's expense and such insurance is cancelled by the insurance
24 company prior to expiration, the seller or subsequent holder
25 shall place comparable insurance with another insurance company
26 and furnish the buyer with a copy of the insurance policy,
27 subject to the same requirements of this act applicable to the
28 original policy. In the event the holder is unable to obtain
29 such insurance in another insurance company, he shall
30 immediately notify the buyer, who may then obtain such insurance
20020H2599B4589 - 29 -
1 from an insurance company, agent or broker of his own selection
2 and the holder shall be liable for any additional [costs]
3 charges for insurance incurred by the buyer in rewriting such
4 insurance for the unexpired period for which the original
5 insurance was written. The holder under these circumstances
6 shall also be liable to the buyer for any loss suffered by the
7 buyer through negligence on the part of the holder in promptly
8 advising the buyer of his inability to obtain replacement
9 insurance.
10 Section 18. Other Costs Included in Amount Financed.--
11 A. In addition to [the cost of] charges for insurance
12 [premiums] authorized in the preceding section of this act, the
13 seller of a motor vehicle under an installment sale contract may
14 require the buyer to pay certain other costs incurred in the
15 sale of a motor vehicle under such contract as follows:
16 1. Fees, payable to the Commonwealth of Pennsylvania, for
17 filing a lien or encumbrance on the certificate of title to a
18 motor vehicle sold under an installment sale contract or
19 collateral security thereto.
20 2. Fees, payable to a public official, for filing or
21 recording and satisfying or releasing the installment sale
22 contract or instruments securing the buyer's obligation.
23 3. Fees, for notarization required in connection with the
24 filing and recording or satisfying and releasing a mortgage,
25 judgment lien or encumbrance.
26 B. The seller of a motor vehicle under an installment sale
27 contract may also contract with the buyer to pay on behalf of
28 the buyer, such other costs incidental to the sale of a motor
29 vehicle and contracted for voluntarily by the buyer as follows:
30 1. Fees, payable to the Commonwealth of Pennsylvania, for
20020H2599B4589 - 30 -
1 registration of the motor vehicle and issuance or transfer of
2 registration plates.
3 2. Fees, payable to the Commonwealth of Pennsylvania, for
4 driver's license for the buyer.
5 3. Costs of messenger service and other costs associated
6 with the submission of documents to the Commonwealth of
7 Pennsylvania or other governmental entity which are contracted
8 for voluntarily by the buyer.
9 C. [Such other costs] The costs described in subsections A
10 and B may be [charged,] contracted for, collected or received by
11 the seller from the buyer independently of the installment sale
12 contract, or the seller may extend credit to the buyer for the
13 amount of such costs and include such amount in the principal
14 amount financed under the installment sale contract.
15 D. [Such other costs] Unless otherwise permitted by the laws
16 of this Commonwealth other than this act, the costs described in
17 subsections A and B which are paid or payable by the buyer shall
18 not exceed the amount which the seller expends or intends to
19 expend therefor. Any such costs which the seller has collected
20 from the buyer, or which have been included in the buyer's
21 obligation under the installment sale contract which are not
22 disbursed by the seller, as contemplated, shall be immediately
23 refunded or credited to the buyer.
24 E. The seller of a motor vehicle under an installment sale
25 contract may also contract with the buyer, to pay on behalf of
26 the buyer, charges for any goods or services necessary or
27 incidental to the sale of a motor vehicle and contracted for by
28 the buyer WHICH ARE NOT IN VIOLATION OF SECTION 10A14 AND which <--
29 are not otherwise restricted pursuant to this act or any other
30 statute. This subsection does not authorize the mark-up of costs
20020H2599B4589 - 31 -
1 described in subsection A or B.
2 Section 13. Section 19 of the act, amended June 18, 1982
3 (P.L.553, No.160), is amended to read:
4 Section 19. Finance Charges.--
5 A. A seller licensed under the provisions of this act shall
6 have the power and authority to charge, contract for, receive or
7 collect a finance charge, as defined in this act, on any
8 installment sale contract covering the retail sale of a motor
9 vehicle in this Commonwealth, which shall not exceed the rates
10 indicated for the respective classification of motor vehicles as
11 follows:
12 Class I. New motor vehicles, except those having a cash
13 price of ten thousand dollars ($10,000) or more and used
14 primarily for commercial purposes and except mobile homes and
15 except new trucks or truck tractors having a manufacturer's
16 gross vehicular weight of fifteen thousand (15,000) pounds or
17 more and new semitrailers or trailers designed for use in
18 combination with truck tractors, eighteen percent (18%) simple
19 interest per year on the unpaid balance.
20 Class II. Used motor vehicles of a model designated by the
21 manufacturer by a year not more than two (2) years prior to the
22 year in which the sale is made, eighteen percent (18%) simple
23 interest per year on the unpaid balance.
24 Class III. Older used motor vehicles of a model designated
25 by the manufacturer by a year more than two (2) years prior to
26 the year in which the sale is made, twenty-one percent (21%)
27 simple interest per year on the unpaid balance.
28 Class IV. New motor vehicles having a cash price of ten
29 thousand dollars ($10,000) or more and used primarily for
30 commercial purposes, and except new trucks or truck tractors
20020H2599B4589 - 32 -
1 having a manufacturer's gross vehicular weight of fifteen
2 thousand (15,000) pounds or more and new semitrailers or
3 trailers designed for use in combination with truck tractors,
4 seven and one-half percent (7 1/2%) per year.
5 Class V. New mobile homes, such percent established as a
6 maximum finance charge for mobile homes by regulation of the
7 Federal Housing Administration, pursuant to the National Housing
8 Act of June 27, 1934 (48 Stat. 1246), whether or not the mobile
9 home is subject to a sale on credit or loan insured or
10 guaranteed in whole or in part by such administration.
11 Class VI. New trucks and truck tractors having a
12 manufacturer's gross vehicular weight of fifteen thousand
13 (15,000) pounds or more and new semitrailers and trailers
14 designed for use in combination with truck tractors, ten percent
15 (10%) per year.
16 B. Such finance charge shall be computed on the principal
17 amount financed as determined under Section 14-B-6 of this act.
18 C. Such finance charge shall be computed at the annual rate
19 indicated on contracts, which are payable by installment
20 payments, extending for a period of one (1) year. On contracts
21 providing for installment payments, extending for a period which
22 is less than or greater than one (1) year, the finance charge
23 shall be computed proportionately.
24 D. Such finance charge may be computed on the basis of a
25 full month for any fractional month period in excess of ten (10)
26 days, and interest may continue to be charged during any period
27 of time for which a default charge is also imposed.
28 E. A minimum finance charge of ten dollars ($10.00) may be
29 charged on any installment sale contract in which the finance
30 charge, when computed at the rates indicated, results in a total
20020H2599B4589 - 33 -
1 charge of less than this amount.
2 F. The maximum finance charge prescribed by this act shall
3 not apply to any sale on credit or loan insured or guaranteed in
4 whole or in part by the Federal Housing Administration, the
5 Veterans' Administration or any other department or agency of
6 the United States Government: Provided, That any such sale on
7 credit or loan is subject to a maximum rate of interest
8 established by law or by such department or agency.
9 Section 14. Section 20 of the act is amended to read:
10 Section 20. Refinancing Installment Sale Contract.--
11 A. The holder of an installment sale contract may extend the
12 scheduled due date, or defer the scheduled payment of all or
13 part of any unpaid installment payment or payments, or renew the
14 unpaid time balance of such contract.
15 B. The holder may contract for, receive and collect a
16 refinance charge for such extension, deferment or renewal. Such
17 refinance charge shall not exceed the amount ascertained under
18 either of the following methods of computation at the respective
19 rates indicated by--
20 Option 1. Computing the refinance charge on the amount of
21 the installment payment or payments or part thereof, which is
22 refinanced for the period of time, for which each payment or
23 part thereof is extended or deferred at the following rates on
24 contracts originally in the respective classification of motor
25 vehicles set forth in the preceding section of this act:
26 Class I. One percent (1%) per month.
27 Class II. One and one-half percent (1 1/2%) per month.
28 Class III. Two percent (2%) per month.
29 Such refinance charges may be computed on the basis of a full
30 month for any fractional month period in excess of ten (10)
20020H2599B4589 - 34 -
1 days.
2 Option 2. Computing the refinance charge on the amount
3 obtained by adding to the unpaid time balance of the contract,
4 [the] charges for insurance [cost] and other [costs] charges
5 incidental to refinancing, by adding unpaid default charges,
6 which may be accrued, and by deducting any rebate which may be
7 due to the buyer for prepayment incidental to refinancing, at
8 the rate of the finance charge in the original contract, for the
9 term of the renewal contract, and subject to the provisions of
10 this act governing computation of the original finance charge:
11 Provided, however, That the provisions of this act governing
12 minimum finance charges and minimum prepayment rebate shall not
13 apply in calculating refinance charges on the contract renewed
14 under this method of computation.
15 C. The holder of an installment sale contract shall not
16 include in any contract for refinancing such contract, any cash
17 loan to the buyer, nor any credit extended to the buyer
18 incidental to the purchase of goods or services: Provided,
19 further, That the word loan herein shall not include, nor this
20 act prohibit, a rearrangement of payments under the installment
21 sale contract by a refinance transaction involving a restoration
22 of certain installment payments made under the contract, but the
23 refinance charge on such amount restored may be not more than
24 six percent per annum, simple interest; And provided, further,
25 however, That the holder of such contract may embody in such
26 refinance contract the [cost of] charge for accessories,
27 equipment and parts for the motor vehicle sold under such
28 contract, and the [cost of] charge for repairs and services to
29 such motor vehicle including finance charges thereon.
30 Section 15. Section 21 of the act, amended April 4, 1990
20020H2599B4589 - 35 -
1 (P.L.110, No.25), is amended to read:
2 Section 21. Default Charges.--
3 [A.] A default charge may be collected on any installment
4 payment or payments which are not paid on or before the due date
5 of such payments. A default charge may be collected on any
6 contract subject to this act, regardless of the class of vehicle
7 AS DEFINED IN SECTION 19 or the method by which the finance <--
8 charge is computed. Such default charge shall not exceed the
9 rate of two percent (2%) per month on the amount of the payment
10 or payments in arrears where the contract is for the sale of a
11 motor vehicle which is other than a heavy commercial motor
12 vehicle. Such default charge may be computed on the basis of a
13 full calendar month for any fractional month period in excess of
14 ten (10) days. On any contract for the sale of a heavy
15 commercial motor vehicle, the default charge shall not exceed
16 for any payment not made within ten (10) days of its scheduled
17 due date, four percent (4%) of the amount of the payment or
18 payments in arrears: Provided, That such default charge may be
19 collected only once on each payment in arrears. Such default
20 charges may be collected, when earned, during the term of the
21 contract, or may be accumulated and collected at final maturity,
22 or at the time of final payment under the contract. Such default
23 charge shall not be collected on any payment in default because
24 of any acceleration provision in the contract.
25 Section 16. Subsection F of section 23 of the act is amended <--
26 SECTION 16. SUBSECTIONS D AND F OF SECTION 23 OF THE ACT ARE <--
27 AMENDED to read:
28 Section 23. Repossession.--
29 * * *
30 D. WHEN REPOSSESSION OF A MOTOR VEHICLE, WHICH IS THE <--
20020H2599B4589 - 36 -
1 SUBJECT OF AN INSTALLMENT SALE CONTRACT, IS EFFECTED OTHERWISE
2 THAN BY LEGAL PROCESS, THE HOLDER SHALL IMMEDIATELY FURNISH THE
3 BUYER WITH A WRITTEN "NOTICE OF REPOSSESSION" DELIVERED IN
4 PERSON, OR SENT BY REGISTERED OR CERTIFIED MAIL DIRECTED TO THE
5 LAST KNOWN ADDRESS OF THE BUYER. SUCH NOTICE SHALL SET FORTH THE
6 BUYER'S RIGHT AS TO REINSTATEMENT OF THE CONTRACT, IF THE HOLDER
7 EXTENDS THE PRIVILEGE OF REINSTATEMENT AND REDEMPTION OF THE
8 MOTOR VEHICLE, SHALL CONTAIN AN ITEMIZED STATEMENT OF THE TOTAL
9 AMOUNT REQUIRED TO REDEEM THE MOTOR VEHICLE BY REINSTATEMENT OR
10 PAYMENT OF THE CONTRACT IN FULL, SHALL GIVE NOTICE TO THE BUYER
11 OF THE HOLDER'S INTENT TO RE-SELL THE MOTOR VEHICLE AT THE
12 EXPIRATION OF FIFTEEN (15) DAYS FROM THE DATE OF MAILING SUCH
13 NOTICE, SHALL DISCLOSE THE PLACE AT WHICH THE MOTOR VEHICLE IS
14 STORED, AND SHALL DESIGNATE THE NAME AND ADDRESS OF THE PERSON
15 TO WHOM THE BUYER SHALL MAKE PAYMENT, OR UPON WHOM HE MAY SERVE
16 NOTICE. THE HOLDER'S NOTICE SHALL ALSO STATE THAT ANY PERSONAL
17 PROPERTY LEFT IN THE REPOSSESSED VEHICLE WILL BE HELD FOR THIRTY
18 (30) DAYS FROM THE DATE OF THE NOTICE'S MAILING. THE PERSONAL
19 PROPERTY MAY BE RECLAIMED WITHIN THE THIRTY (30) DAY TIME
20 PERIOD. THEREAFTER THE PROPERTY MAY BE DISPOSED OF IN THE SAME
21 MANNER AS THE MOTOR VEHICLE AND OTHER COLLATERAL.
22 * * *
23 F. The [administrator] department shall have authority to
24 reduce the amount of or prohibit entirely any item of expense of
25 retaking, storing or repairing of a motor vehicle which appears
26 to him to be fictitious, unnecessary, unreasonable or
27 exorbitant, or such as would not have been incurred by a prudent
28 person under similar circumstances.
29 * * *
30 Section 17. Sections 25, 31, 36 and 37 of the act are
20020H2599B4589 - 37 -
1 amended to read:
2 Section 25. Redemption and Termination of Contract after
3 Repossession.--
4 A. [When] Unless the right of redemption is waived in a
5 nonconsumer transaction under 13 Pa.C.S. § 9624(c) (relating to
6 waiver), if repossession of a motor vehicle which is the subject
7 of an installment sale contract is effected within or outside
8 the Commonwealth of Pennsylvania otherwise than by legal
9 process, the holder shall retain such repossessed motor vehicle
10 [within the county in which it was retaken] for a period of
11 fifteen (15) days after mailing of notice of repossession to the
12 buyer. [If such repossession is made outside of the Commonwealth
13 of Pennsylvania, the motor vehicle, at the option of the holder,
14 may be retained in the vicinity of retaking for such fifteen
15 (15) day period or brought back to the county in Pennsylvania in
16 which it was originally sold to the buyer under such contract
17 and retained in such county for such fifteen (15) day period.]
18 B. During such fifteen (15) day period the buyer may redeem
19 the motor vehicle and terminate the contract by payment or
20 tender of payment to the holder of the following amounts,
21 subject to the conditions hereinafter indicated:
22 1. When default at the time of repossession was less than
23 fifteen (15) days, the amount of the unpaid time balance, plus
24 the amount of any accrued default charges authorized by this
25 act, plus any other amount lawfully due under the contract,
26 excluding costs of retaking, repairing and storage, less rebate
27 of unearned finance charge.
28 2. When default at the time of repossession exceeded fifteen
29 (15) days, the amount of the unpaid time balance, plus the
30 amount of any accrued default charges authorized by this act,
20020H2599B4589 - 38 -
1 plus costs of retaking, repairing, repossessing and storing
2 authorized by this act, plus any other amount lawfully due under
3 the contract, less rebate of unearned finance charge.
4 C. If the buyer redeems the motor vehicle and terminates the
5 contract by payment or tender as provided in subsection B, the
6 holder shall return the motor vehicle and any other collateral
7 in any manner consistent with 13 Pa.C.S. § 9623 (relating to
8 right to redeem collateral). Property will be deemed to be
9 returned in a manner in compliance with this act and 13 Pa.C.S.
10 § 9623 by delivery to ONE OF THE FOLLOWING SITES DESIGNATED BY <--
11 THE BUYER:
12 1. the county in this Commonwealth or within a comparable
13 governmental unit outside this Commonwealth where repossession
14 occurred;
15 2. a county in this Commonwealth where the buyer resides; or
16 3. the county in this Commonwealth in which the vehicle was
17 purchased under such contract.
18 D. UPON RECEIPT OF THE FUNDS NECESSARY TO REDEEM THE MOTOR <--
19 VEHICLE AS PROVIDED IN SUBSECTION B, THE HOLDER SHALL RETURN THE
20 REPOSSESSED MOTOR VEHICLE AS SOON AS IS REASONABLY POSSIBLE, BUT
21 NOT LATER THAN TEN (10) BUSINESS DAYS FROM THE RECEIPT OF THE
22 FUNDS.
23 Section 31. Prohibited Charges.--
24 A. A licensee under this act shall not charge, contract for,
25 collect, or receive from the buyer, directly or indirectly, any
26 further or other amount for costs, charges, examination,
27 appraisal, service, brokerage, commission, expense, interest,
28 discount, fees, fines, penalties or other thing of value in
29 connection with the retail sale of a motor vehicle under an
30 installment sale contract in excess of [the cost of] charges for
20020H2599B4589 - 39 -
1 insurance [premiums], other [costs] charges necessary or
2 incidental to the sale of the motor vehicle, the finance
3 charges, refinance charges, default charges, recording and
4 satisfaction fees, court costs, attorney's fees and expenses of
5 retaking, repairing and storing a repossessed motor vehicle
6 which are [authorized by the provisions of this act] disclosed
7 as required by subsection B of section 14.
8 B. A licensee under this act shall not collect any charge
9 whatsoever in connection with a contemplated sale of a motor
10 vehicle under an installment sale contract, if such contract is
11 not consummated: Provided, however, That nothing contained
12 herein shall affect the legal status of a deposit paid by a
13 prospective buyer to a seller as a binder on the contemplated
14 purchase of a motor vehicle.
15 C. An installment sale contract, wherein the seller or any
16 subsequent holder has charged, contracted for, collected, or
17 received from the buyer any prohibited [costs or] charges
18 whatsoever shall be unenforcible as to such prohibited [costs
19 or] charges.
20 Section 36. Exemptions.--
21 A. This act shall not affect or impair any business
22 conducted lawfully under license issued pursuant to the act of
23 April eighth, one thousand nine hundred thirty-seven (Pamphlet
24 Laws, two hundred sixty-two), known as the "Consumer Discount
25 Company Act," or supplements or amendments thereto.
26 B. This act shall not apply to an extension of credit for
27 the purchase of a motor vehicle, including the financing of any
28 other costs or charges necessary or incidental to the sale or
29 financing of a motor vehicle, made pursuant to the act of
30 November 30, 1965 (P.L.847, No.356), known as the "Banking Code
20020H2599B4589 - 40 -
1 of 1965."
2 Section 37. Penalties.--
3 A. Any person, partner, association, business corporation,
4 banking institution, nonprofit corporation, common law trust,
5 joint stock company or any other group of individuals, however
6 organized, or any owner, partner, member, officer, director,
7 trustee, employe, agent, broker or representative thereof who or
8 which shall engage in this Commonwealth in business as
9 installment seller, sales finance company or collector-
10 repossessor as defined in this act without having obtained a
11 license, as required under this act, shall be guilty of a
12 misdemeanor, and upon conviction thereof, shall be sentenced to
13 pay a fine of not less than [five hundred dollars ($500)] two
14 thousand dollars ($2,000), or more than [five thousand dollars
15 ($5,000)] ten thousand dollars ($10,000), or to suffer
16 imprisonment of not [less than six (6) months or,] more than
17 three (3) years, or both, at the discretion of the court.
18 B. Any licensee conducting business under this act as an
19 installment seller, sales finance company or collector-
20 repossessor or any owner, partner, member, officer, director,
21 trustee, employe, agent, broker or representative thereof who
22 shall violate any provision of this act, or shall direct [or
23 consent to] such violation shall be guilty of a misdemeanor, and
24 upon conviction thereof, shall be sentenced to pay a fine of not
25 more than [five hundred dollars ($500)] two thousand dollars
26 ($2,000) for the first offense; and for each subsequent offense
27 a like fine and/or suffer imprisonment not to exceed one (1)
28 year in the discretion of the court.
29 C. Any licensed seller or sales finance company as holder of
30 a motor vehicle installment sale contract who hires, authorizes
20020H2599B4589 - 41 -
1 or permits an unlicensed collector-repossessor, as defined in
2 this act, to collect payments on any such contract or to
3 repossess any motor vehicle sold under such contract within this
4 Commonwealth shall be guilty of a violation of this act, and
5 subject to the penalties imposed by the foregoing provisions of
6 this section.
7 D. Any person required to be licensed under this act that
8 violates this act or directs a violation or who engages in any
9 activity for which a license could be suspended or revoked under
10 section 10 shall be subject to a civil penalty levied by the
11 department of not more than two thousand dollars ($2,000) for
12 each offense.
13 E. A sales finance company licensed pursuant to this act
14 engaged in the purchase, sale, assignment, securitization or
15 servicing of installment sale contracts shall not be held liable
16 UNDER THIS ACT for excessive mark-ups by installment sellers to <--
17 charges described in subsection E of section 18 or for failures
18 to make disclosures in subsection G of section 13.
19 Section 18. The act is amended by adding a section to read:
20 Section 37.1. Regulations and Orders.--The department is
21 authorized to promulgate regulations and to issue orders,
22 statements of policy and written interpretations as necessary or
23 appropriate for the interpretation or enforcement of this act.
24 Section 19. The General Assembly finds and declares as
25 follows:
26 (1) All citizens are entitled to fair dealing with those
27 who sell and finance motor vehicles in this Commonwealth. The
28 act became law in 1947, and its purpose is to protect
29 Pennsylvania's consumers from improper sales and financing
30 practices.
20020H2599B4589 - 42 -
1 (2) Because citizens can now choose to purchase products
2 and services related to the purchase of a motor vehicle which
3 were not available or even contemplated when the act was
4 enacted, and include those items in the amount financed, it
5 is now desirable to amend the act to provide for additional
6 disclosures to consumers who purchase incidental items in
7 conjunction with the purchase of a motor vehicle.
8 (3) It is further desirable to amend the act to provide
9 for the imposition of civil penalties against those sellers
10 and lenders that engage in fraudulent or abusive practices to
11 the detriment of consumers in this Commonwealth.
12 (4) Uncertainty has arisen with regard to the intent of
13 certain provisions of the act as enacted in 1947. In order to
14 provide for continued consumer protection and financing
15 options, this act is intended to clarify the intent of the
16 act to facilitate the financing of vehicles and related
17 products and services.
18 Section 20. Because many of the circumstances and events
19 that led to the initial adoption of the act in 1947 have
20 substantially changed due to substantial improvements in
21 business practices and expanded Federal regulations, a study of
22 proposals to update and modernize the act shall be conducted by
23 the Joint State Government Commission and the recommendations of
24 the commission reported to the General Assembly. In addition to
25 changes to the act, the commission shall also consider the
26 advisability of merging the provisions of the act of October 28,
27 1966 (1st Sp.Sess., P.L.55, No.7), known as the Goods and
28 Services Installment Sales Act, and other consumer finance
29 legislation into a consolidated Consumer Credit Code which
30 avoids duplication of Federal law and regulations and promotes
20020H2599B4589 - 43 -
1 uniformity of law among the states. The study shall be conducted
2 by a task force established by the commission consisting of four
3 members of the Senate, two appointed by the President pro
4 tempore of the Senate and two appointed by the Minority Leader
5 of the Senate and four members of the House of Representatives,
6 two appointed by the Speaker of the House of Representatives and
7 two appointed by the Minority Leader of the House of
8 Representatives. In addition, the commission shall appoint an
9 advisory committee to assist the task force that shall include a
10 representative of the Department of Banking, the Consumer
11 Protection Division of the Office of Attorney General, the
12 Pennsylvania Automotive Association, the Pennsylvania Retailers'
13 Association, the Pennsylvania Bankers Association and other
14 individuals with knowledge and expertise regarding motor vehicle
15 sales finance, installment sales and consumer protection laws
16 and regulations AND A MEMBER OF THE PUBLIC. <--
17 Section 21. All acts and parts of acts are repealed insofar
18 as they are inconsistent with this act.
19 Section 22. The following apply:
20 (1) This act shall not adversely affect the adequacy of
21 actions taken to comply with this act prior to the effective
22 date of this act, including disclosures provided prior to the
23 effective date of this act.
24 (2) The following provisions are intended to clarify and
25 confirm the meaning of the act and not to change the meaning
26 or interpretation of the act:
27 (i) The amendment or addition of clauses 13, 13.1,
28 13.2, 14 and 16 of section 3 of the act.
29 (ii) The amendment or addition of provisions of the
30 act which utilize the definitions referred to in
20020H2599B4589 - 44 -
1 subparagraph (i).
2 (iii) The amendment of sections 16, 17 and 18 of the
3 act.
4 (iv) The amendment of subsection D of section 19 of
5 the act.
6 (v) The amendment of sections 21, 25 and 31 of the
7 act.
8 (vi) The addition of subsection B of section 36 of
9 the act.
10 (vii) The addition of subsection E of section 37 of
11 the act.
12 (3) To the extent necessary to clarify the meaning or
13 interpretation of the act, the provisions referred to in
14 paragraph (2) shall apply retroactively to causes of action
15 which arose on or before the effective date of this act.
16 (4) As to the amendment of section 14 of the act:
17 (i) The amendment of section 14 of the act
18 constitutes a clarification and confirmation of the
19 meaning of the act in accordance with paragraph (2) to
20 the extent that the amendment:
21 (A) provides that amounts disclosed under
22 clauses 1 and 5 of subsection B of section 14 of the
23 act may include charges and are not limited to actual
24 costs incurred by a seller or finance company, except
25 as otherwise provided by section 18 of the act and
26 clause 13.2 of section 3 of the act; and
27 (B) allows the disclosure of charges for service
28 contracts and warranties at the option of the seller
29 or sales finance company as either:
30 (I) part of the cash price under clause 1 of
20020H2599B4589 - 45 -
1 subsection B of section 14 of the act; or
2 (II) other charges necessary or incidental
3 to the sale of a motor vehicle under clause 5 of
4 subsection B of section 14 of the act.
5 (ii) The amendment of section 14 of the act
6 constitutes a change in the law to the extent that the
7 amendment imposes new disclosure requirements.
8 Section 23. This act shall take effect in 90 days.
C26L12VDL/20020H2599B4589 - 46 -