Bill Text: PA HB1393 | 2011-2012 | Regular Session | Introduced

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Bill Title: Codifying the provisions of the Motor Vehicle Sales Finance Act and the Goods and Services Installment Sales Act; making conforming amendments to Title 42; and making related repeals.

Spectrum: Strong Partisan Bill (Republican 13-1)

Status: (Introduced - Dead) 2011-04-26 - Referred to COMMERCE [HB1393 Detail]

Download: Pennsylvania-2011-HB1393-Introduced.html

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PRINTER'S NO. 1641
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1393 Session of2011
INTRODUCED BY ROSS, CALTAGIRONE, EVERETT, GEIST, GINGRICH, HENNESSEY, MICOZZIE, MILLARD, MILLER, MILNE, MOUL, MURT, O'NEILL AND SCAVELLO, APRIL 26, 2011
REFERRED TO COMMITTEE ON COMMERCE, APRIL 26, 2011
AN ACT
Amending Title 12 (Commerce and Trade) of the Pennsylvania
Consolidated Statutes, codifying the provisions of the Motor
Vehicle Sales Finance Act and the Goods and Services
Installment Sales Act; making conforming amendments to Title
42; and making related repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 12 of the Pennsylvania Consolidated
Statutes is amended by adding a part heading to read:
PART IV
ECONOMIC DEVELOPMENT AND FINANCING
Section 2. Title 12 is amended by adding a part to read:
PART V
CONSUMER CREDIT
Chapter
61. General Provisions
62. Motor Vehicle Sales Finance
63. Goods and Services Installment Sales
CHAPTER 61
GENERAL PROVISIONS
Sec.
6101. Scope of part.
6102. Definitions.
6103. Contracts and agreements.
6104. Electronic transactions.
§ 6101. Scope of part.
This part relates to consumer credit.
§ 6102. Definitions.
The following words and phrases when used in this part shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of Banking of the Commonwealth.
"Financial institution." A bank, bank and trust company,
trust company, savings bank, private bank, savings association
or credit union organized and doing business under the
provisions of any law of this Commonwealth, another state or the
United States.
"Records." Books, accounts, papers, documents, files and
other similar business records and information, including
information that is:
(1) stored in an electronic or other medium that uses
technology having electrical, digital, magnetic, wireless
optical, electromagnetic or similar capabilities; and
(2) retrievable in perceivable form.
§ 6103. Contracts and agreements.
(a) General rule.--A contract or agreement under this part
shall be dated and in writing.
(b) Clear and conspicuous provisions.--The headings, notices
and language of a contract or agreement under this part shall be
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clear and conspicuous and meet the following requirements:
(1) Except as otherwise provided in this subsection, the
language in a contract or agreement under this part shall be
in at least eight-point type.
(2) A heading in a contract or agreement under this part
shall be in at least ten-point bold type.
(3) A notice or disclosure in a contract or agreement
under this part shall be in at least ten-point bold type.
(4) An acknowledgment under this part shall be in at
least ten-point bold type.
§ 6104. Electronic transactions.
(a) Effect on other law.--Nothing in this part shall be
construed to supersede the provisions of the act of December 16,
1999 (P.L.971, No.69), known as the Electronic Transactions Act.
(b) Department procedures.--The department may establish
procedures for electronic transactions under this part,
including:
(1) the filing of applications and renewals for licenses
and registrations;
(2) the filing of reports and other required records;
and
(3) the verification of records and signatures on forms.
CHAPTER 62
MOTOR VEHICLE SALES FINANCE
Subchapter
A. General Provisions
B. Licenses
C. Installment Sale Contracts
D. Costs and Charges
E. Repossession
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F. Penalties and Liability
SUBCHAPTER A
GENERAL PROVISIONS
Sec.
6201. Scope of chapter.
6202. Definitions.
6203. Authority of department.
6204. Records.
6205. Appeals.
6206. Deposit of fees and fines.
6207. Distribution of information.
6208. Venue.
6209. Applicability.
6210. Markups.
§ 6201. Scope of chapter.
This chapter relates to motor vehicle sales finance.
§ 6202. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Buyer."
(1) A person who buys, hires or leases a motor vehicle
under an installment sale contract or a legal successor in
interest to the person, even if the person may have entered
into an extension, deferment, renewal or other revision of
the contract.
(2) The term includes a person who as surety, endorser,
guarantor or otherwise is liable on an obligation created by
a buyer under an installment sale contract.
"Collateral security."
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(1) Security, other than a security interest in a motor
vehicle, which is the subject of an installment sale contract
and given to secure performance of an obligation of a buyer
or the buyer's surety or guarantor under an installment sale
contract or an extension, deferment, renewal or other
revision of the contract.
(2) The term includes the following:
(i) The undertakings of a surety or guarantor for a
buyer.
(ii) An interest in, encumbrance on or pledge of
real or personal property other than the motor vehicle
that is the subject of an installment sale contract.
"Collector-repossessor."
(1) A person who, as an independent contractor and not
as a regular employee of an installment seller or a sales
finance company, collects payments on installment sale
contracts or repossesses motor vehicles that are the subject
of installment sale contracts.
(2) The term excludes the following:
(i) A duly constituted public official or an
attorney-at-law acting in an official capacity.
(ii) A licensed seller or licensed sales finance
company making collections or repossessions on
installment sale contracts, if the seller or sales
finance company:
(A) was previously a holder; or
(B) was not a holder but occasionally makes
collections or repossessions for other licensed
sellers or licensed sales finance companies.
"Commercial purpose." A purpose related to the production,
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exhibition, marketing, transportation, processing or manufacture
of goods or services.
"Debt cancellation agreement." A contractual arrangement in
which a person agrees to pay all or part of a buyer's obligation
to repay an extension of credit from a holder upon the
occurrence of a specified event.
"Debt suspension agreement." A contractual arrangement in
which a person agrees to pay for a specific period of time all
or part of a buyer's obligation to repay an extension of credit
from a holder upon the occurrence of a specified event.
"Down payment." Partial payments made in cash or otherwise
and received by or for the benefit of an installment seller
prior to or substantially contemporaneous with either the
execution of an installment sale contract or the delivery of the
items sold under the contract, whichever occurs later.
"Finance charge." Either of the following:
(1) The amount of the consideration in excess of the
purchase price, which a buyer is required to pay to an
installment seller for:
(i) the privilege of purchasing a motor vehicle
under an installment sale contract; or
(ii) the credit extended by the seller to the buyer
in conjunction with the sale of a motor vehicle under an
installment sale contract.
(2) The difference between the cash sale price of the
motor vehicle and the time balance, exclusive of insurance
charges, late charges and other charges that are necessary or
incidental to an installment sale and specifically authorized
by this chapter to be included in an installment sale
contract.
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"Heavy commercial motor vehicle." A new or used motor
vehicle, excluding a recreational vehicle, that is:
(1) a truck or truck tractor having a manufacturer's
gross vehicular weight of 13,000 pounds or more; or
(2) a semitrailer or trailer designed for use in
combination with a truck or truck tractor.
"Holder." An installment seller or a sales finance company
with the rights of the installment seller under the installment
sale contract.
"Installment sale contract."
(1) A contract for the retail sale of a motor vehicle,
or a contract that has a similar purpose or effect, whether
or not the installment seller has retained a security
interest in the motor vehicle or has taken collateral
security for a buyer's obligation, if:
(i) all or part of the purchase price is payable in
two or more scheduled payments subsequent to the making
of the contract; or
(ii) a buyer undertakes to make two or more
scheduled payments or deposits that may be used to pay
all or part of the purchase price.
(2) The term includes any form of contract, however
nominated, for the bailment or leasing of a motor vehicle,
which contains both of the following, or any other
arrangement having a similar purpose or effect:
(i) The buyer contracts to pay as compensation a sum
substantially equivalent to or in excess of the value of
the motor vehicle.
(ii) Ownership of the motor vehicle may be
transferred to the buyer.
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(3) The term includes and applies to an extension,
deferment, renewal or other revision of the installment sale
contract.
(4) The term excludes the following:
(i) A sale or contract for sale upon an open book
account, if both of the following conditions are met:
(A) The installment seller has not retained or
taken a security interest in the motor vehicle sold
or a collateral security for the buyer's obligation.
(B) The buyer:
(I) is not required to pay a sum other than
the purchase price of the motor vehicle sold in
connection with the sale or extension of credit;
and
(II) is obligated to pay for the motor
vehicle in full within 90 days from the time the
sale or contract for sale was made.
(ii) A right to acquire possession of goods under a
lease, unless the lease:
(A) constitutes a security interest as defined
in 13 Pa.C.S. § 1201 (relating to general
definitions); and
(B) is subject to 13 Pa.C.S. Div. 9 (relating to
secured transactions).
"Installment seller." A person engaged in the business of
selling, hiring or leasing a motor vehicle under an installment
sale contract or a legal successor in interest to the person.
"Insurance charges." Premiums, commissions and other
payments authorized by insurance statutes or regulations of this
Commonwealth.
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"Licensee." A person who has been issued a license as an
installment seller, a sales finance company or a collector-
repossessor under this chapter, which license has not expired
and has not been surrendered or revoked.
"Manufactured home." The term includes both of the
following:
(1) A manufactured home as it is defined under section
603(6) of the National Manufactured Housing Construction and
Safety Standards Act of 1974 (Public Law 93-383, 42 U.S.C. §
5402(6)).
(2) A mobile home as defined in 75 Pa.C.S. § 102
(relating to definitions).
"Motor vehicle."
(1) A device in which, upon which or by which a person
or property is or may be transported or drawn upon a public
highway.
(2) The term includes a trailer, semitrailer,
manufactured home and recreational vehicle.
(3) The term excludes the following:
(i) A tractor, a power shovel, road machinery,
agricultural machinery and other machinery not designed
primarily for highway transportation, but which may
incidentally transport persons or property on a public
highway.
(ii) A device that moves upon or is guided by a
track or travels through the air.
"Principal amount financed." The unpaid purchase price
balance plus the following:
(1) The charges for any insurance required or obtained
as security for or by reason of the sale of a motor vehicle
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under an installment sale contract.
(2) Other costs or charges necessary or incidental to
the sale of the motor vehicle under an installment sale
contract.
(3) Amounts representing payment of a prior credit or
lease balance to discharge a security interest, lien or lease
interest on a motor vehicle or other property traded or
returned.
"Purchase price." The price measured in dollars at which an
installment seller would in good faith sell to a buyer, and the
buyer would in good faith buy from the seller, a motor vehicle
that is the subject matter of an installment sale contract, if
the sale were a cash sale instead of an installment sale.
"Recreational vehicle." As defined in section 2 of the act
of December 22, 1983 (P.L.306, No.84), known as the Board of
Vehicles Act.
"Retail sale." The sale of a motor vehicle for the buyer's
use or another's use from which the buyer derives a benefit or
satisfaction.
"Sales finance company."
(1) A person engaged as principal, agent or broker in
the business of financing or soliciting the financing of an
installment sale contract made between other parties.
(2) The term includes the following:
(i) A person in the business of acquiring, investing
in or lending money or credit on the security of an
installment sale contract or any interest in the
contract, whether by discount, purchase or assignment of
the contract, or otherwise.
(ii) An installment seller, whether or not licensed
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under this chapter, who finances an installment sale
contract for another seller or a sales finance company.
(3) The term excludes a person to the extent that the
person is exempt under section 6229(e) (relating to
transfer).
"Security interest." A security interest as provided by 13
Pa.C.S. Div. 9 (relating to secured transactions).
"Service contract." A written contract, optional on the part
of a buyer, to perform over a fixed period of time or for a
specified duration services regarding the maintenance or repair
of a motor vehicle.
"Time balance." The sum of the principal amount financed and
the finance charge.
"Unpaid purchase price balance." The difference between the
purchase price and the down payment.
"Warranty."
(1) Either of the following, which becomes part of the
basis of the bargain between a buyer and an installment
seller for purposes other than resale:
(i) A written declaration of fact or written promise
made in connection with the sale of a motor vehicle by an
installment seller or manufacturer to a buyer that
relates to the nature of the materials or workmanship
regarding the motor vehicle and affirms or promises that
the motor vehicle is free of defects or will meet a
specified level of performance over a specified period of
time.
(ii) Any undertaking in writing in connection with
the sale of a motor vehicle by an installment seller or
manufacturer to refund, repair, replace or take other
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remedial action with respect to the motor vehicle if the
motor vehicle fails to meet the specifications set forth
in the undertaking.
(2) The term excludes a service contract and an extended
warranty with the characteristics of a service contract.
§ 6203. Authority of department.
(a) Powers.--The department has the authority to do any of
the following:
(1) Investigate the business activities of a licensee
and person engaged in a business contemplated by this chapter
by the following means:
(i) Examining the records of the licensee and
person.
(ii) Accessing the offices and places of business of
the licensee and person and the records of the licensee
and person.
(2) Examine the records, safes and vaults of a person
described under subsection (b)(2) for the purpose of
discovering violations of this chapter.
(3) Require the attendance and testimony of witnesses
and the production of records relating to a business that the
department has the authority to investigate. For the purposes
of this subsection, a duly authorized representative of the
department may sign subpoenas, administer oaths and
affirmations, examine witnesses and receive evidence.
(4) Prescribe the minimum information to be shown in the
records of a licensee so as to enable the department to
determine compliance with the provisions of this chapter.
(5) Promulgate regulations and issue orders, statements
of policy and written interpretations as necessary or
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appropriate for the interpretation or enforcement of this
chapter.
(6) Reduce the amount of or prohibit entirely a cost
regarding the retaking, storing or repairing of a motor
vehicle under section 6256 (relating to buyer's liability for
costs) if the cost:
(i) appears to be fictitious, unnecessary,
unreasonable or exorbitant; or
(ii) would not have been incurred by a prudent
person under similar circumstances.
(7) Adopt a statement of policy that contains guidelines
determining mark-ups that the department finds, after
reasonably considering relevant market data, not to be
excessive and update and revise the statement of policy to
reflect changing business conditions.
(b) Applicability.--
(1) This section applies whether the person acts or
claims to act as principal, agent or broker, either under or
without the authority of this chapter.
(2) A person who is not licensed under this chapter is
presumed to be engaged in a business contemplated by this
chapter, if the person, as principal, agent or broker,
advertises or solicits business for which a license is
required by the provisions of this chapter.
(c) Administration.--In the case of disobedience of a
subpoena or the noncooperation of a witness appearing before the
department, the department may invoke the aid of the courts, and
the court shall issue an order requiring the person subpoenaed
to obey the subpoena, give evidence or produce records relative
to the matter in question. Failure to obey the court order may
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be punished by the court as contempt.
(d) Expenses.--The expenses incurred by the department in
connection with an examination or investigation, including a
proportionate part of the salary of an examiner or other
employee of the department and counsel assigned by the
department, may be assessed by the department upon the
particular person examined or investigated.
§ 6204. Records.
(a) General rule.--A licensee shall maintain, at the place
of business designated in the license certificate, records of
the business conducted under the license issued for the place of
business so as to enable the department to determine whether the
licensee's business contemplated by this chapter is being
operated in accordance with the provisions of this chapter.
(b) Multiple places of business.--A licensee operating two
or more licensed places of business in this Commonwealth may
maintain the general control records of all the offices at any
one of the offices, or at any other office maintained by the
licensee, upon the following:
(1) The filing of a written request with the department
designating the office at which the control records are
maintained.
(2) Approval of the request by the department.
(c) English language.--Records of a licensee shall be
maintained in the English language.
(d) Preservation.--Records of a licensee shall be preserved
and available for examination by the department for at least two
years after making the final entry therein.
§ 6205. Appeals.
An appeal may be taken from the action of the department in
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suspending and revoking a license under section 6218 (relating
to revocation or suspension of license) or imposing a civil
penalty under section 6274 (relating to civil penalty by
department) in accordance with the procedure prescribed by 2
Pa.C.S. Chs. 5 Subch. A (relating to practice and procedure of
Commonwealth agencies) and 7 Subch. A (relating to judicial
review of Commonwealth agency action).
§ 6206. Deposit of fees and fines.
License fees and fines that are received by the department
under this chapter shall be deposited in the State Treasury to
the credit of a special fund for the use of the department in
administering this and other laws of this Commonwealth placed
under its administration.
§ 6207. Distribution of information.
(a) Department.--The department shall provide a copy of the
provisions of this chapter to each licensee in conjunction with
the licensee's initial license and all renewal applications.
(b) Licensee.--
(1) A licensee shall make the information under
subsection (a) available to its employees.
(2) A copy of the information under subsection (a) shall
be kept at the licensee's place of business for inspection by
a buyer.
§ 6208. Venue.
An action on an installment sale contract shall be commenced
in a county where any of the following occurred:
(1) The buyer signed the contract.
(2) The buyer resides at the commencement of the action.
(3) The buyer resided when the contract was entered
into.
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§ 6209. Applicability.
(a) Consumer discount companies.--The provisions of this
chapter do not affect or impair a business conducted lawfully
under a license issued under the act of April 8, 1937 (P.L.262,
No.66), known as the Consumer Discount Company Act.
(b) Other extensions of credit.--The provisions of this
chapter do not apply to an extension of credit for the purchase
of a motor vehicle, including the financing of other costs or
charges necessary or incidental to the sale or financing of a
motor vehicle, made under the act of November 30, 1965 (P.L.847,
No.356), known as the Banking Code of 1965.
§ 6210. Markups.
(a) General rule.--A markup that is consistent with the
guidelines set by the department is not excessive.
(b) Excessive markup.--
(1) A markup in excess of the guidelines set by the
department shall be deemed excessive.
(2) Until the department adopts its guidelines, a markup
for a service contract, warranty, debt cancellation agreement
and debt suspension agreement in excess of 100% of the cost
to the dealer shall be deemed excessive.
SUBCHAPTER B
LICENSES
Sec.
6211. General license rules.
6212. Initial license application.
6213. Bond.
6214. License fees.
6215. License certificate.
6216. License renewal.
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6217. Refusal to issue license or license renewal.
6218. Revocation or suspension of license.
6219. Multiple places of business.
§ 6211. General license rules.
(a) License required.--The following persons may engage or
continue to engage in this Commonwealth as a principal,
employee, agent or broker only as authorized in this chapter and
under a license issued by the department:
(1) An installment seller.
(2) A sales finance company.
(3) A collector-repossessor.
(b) Term.--
(1) Subject to paragraph (2), unless revoked or
suspended under section 6218 (relating to revocation or
suspension of license) or otherwise surrendered, a license
shall be valid for one year.
(2) A license shall expire on October 1 annually, after
the license is initially approved or renewed.
(c) Transfer or assignment.--A license may not be
transferred or assigned.
§ 6212. Initial license application.
(a) General rule.--An initial license application shall be
in writing, under oath and in the form prescribed by the
department.
(b) Contents.--An initial license application shall contain
the following:
(1) The name under which the business is conducted.
(2) The physical street address of the place of
business.
(3) The date of registration with the Secretary of the
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Commonwealth of any fictitious or trade name of the business.
(4) If the applicant is a corporation:
(i) the date and place of incorporation; and
(ii) the names and addresses of the officers and
directors.
(5) If the applicant is an individual owner, the name
and residence address of the owner.
(6) If the applicant is a partnership, association or
limited liability company, the name and residence address of
each owner, partner or member and any managers.
(7) Any other information that the department requires.
(c) Process; notice.--
(1) An application filed by an association or
corporation shall be accompanied by a power of attorney
showing the name and address of the authorized agent in this
Commonwealth upon whom judicial and other process or legal
notice may be served.
(2) The department is authorized to accept service of
process or notice if the agent in paragraph (1):
(i) has died;
(ii) is removed from this Commonwealth; or
(iii) is under a legal disability or otherwise
disqualified from serving as agent.
§ 6213. Bond.
(a) Bond required.--A bond shall accompany each license
application for a sales finance company and collector-
repossessor.
(b) Form.--The bond shall be in the form prescribed by the
department.
(c) Amount.--
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(1) A bond for a sales finance company shall be in the
amount of $10,000.
(2) A bond for a collector-repossessor shall be in the
amount of $5,000.
(d) Execution.--
(1) Except as provided in paragraph (2), the bond shall
be executed by a surety company authorized by the laws of
this Commonwealth to transact business.
(2) If the bond accompanying a license application for a
sales finance company is filed by a financial institution
within this Commonwealth, the financial institution may
execute the bond on its own behalf.
(3) The bond shall be executed to the Commonwealth.
(e) Purpose.--The bond shall be for the use of the
Commonwealth and for any person aggrieved by the misconduct of
the licensee.
(f) Condition.--The condition of the bond is that the
licensee will:
(1) comply with and abide by the provisions of this
chapter and the rules and regulations of the department; and
(2) pay to the Commonwealth, the department or a person
all money due to each under the provisions of this chapter.
(g) Action on bond.--A person may maintain an action on the
bond in a court having jurisdiction of the amount claimed if all
the following occur:
(1) The person is aggrieved by the misconduct of a
licensee.
(2) The person receives a judgment against the licensee
for the misconduct.
(3) The person executes on the judgment.
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(4) The department assents to the action on the bond.
§ 6214. License fees.
(a) Amount.--A license application shall be accompanied by a
license fee as set forth in section 603-A of the act of April 9,
1929 (P.L.177, No.175), known as The Administrative Code of
1929.
(b) Abatement.--No abatement in the amount of the license
fee shall be made if the license is:
(1) issued for less than one year; or
(2) surrendered, canceled or revoked prior to the
expiration of the license period for which the license was
issued.
§ 6215. License certificate.
(a) Issuance.--If the department approves an applicant's
license application, it shall issue to the applicant a license
certificate showing the name and address of the person
authorized to do business under the license.
(b) Public inspection.--
(1) An installment seller and a sales finance company
shall post the license certificate in a conspicuous place in
the place of business of the licensee, so that the
certificate is in full view of the public at all times.
(2) A collector-repossessor shall carry the license
certificate in his or her immediate possession whenever
engaged in the type of business for which the license is
issued, so that the certificate may be presented for
inspection upon request by any person entitled to inspection.
(c) Amendment.--
(1) A licensee desiring to change the address of the
place of business shall:
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(i) give prior written notice to the department;
(ii) return the license certificate to the
department for amendment; and
(iii) retain a copy of the license certificate.
(2) The department shall amend the license certificate
to show the new address and the date. The new address shall
thereafter be the authorized address of the licensee.
(3) A licensee is not required to pay a charge for
amendment of a license certificate to effect a change of
address.
§ 6216. License renewal.
An application for a license renewal shall have the following
characteristics:
(1) The application shall be in writing, under oath and
in the form prescribed by the department.
(2) The application shall be filed at least 15 days
prior to October 1.
(3) The application shall include an update of the
information under section 6212(b) and (c)(1) (relating to
initial license application).
(4) The application shall be accompanied by the
following:
(i) A new bond under the same provisions as set
forth in section 6213 (relating to bond), which shall be
filed annually at least 15 days prior to October 1.
(ii) A license fee under the same provisions as set
forth in section 6214 (relating to license fees), which
shall be paid annually on or before October 1 for each
license and place of business.
§ 6217. Refusal to issue license or license renewal.
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(a) Discretionary refusal.--Subject to subsection (b), the
department may refuse to issue a license or renew a license
because of any of the following:
(1) The applicant has made a material misstatement in
the application for license or license renewal.
(2) The existence of any of the grounds under section
6218(a) (relating to revocation or suspension of license).
(3) The department is not satisfied that the financial
responsibility, character, reputation, integrity and general
fitness of the applicant command the confidence of the public
and warrant the belief that the business for which the
license application is filed will be operated lawfully,
honestly, fairly and in accordance with this chapter and the
general laws of this Commonwealth. In so determining, the
department shall consider the applicant's:
(i) owners, partners or members and any managers, if
the applicant is a partnership, association or limited
liability company; and
(ii) officers and directors, if the applicant is a
corporation.
(b) Mandatory refusal.--
(1) The department may not issue a license to an
applicant under this chapter until the expiration of at least
one year from the effective date of any revocation of the
applicant's license or the department's refusal to issue a
license or license renewal to the applicant.
(2) The department may not issue a license or renew a
license if, within ten years of the date of license
application or license renewal application, the applicant or
the applicant's affiliate, owner, partner, member, officer,
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director, employee or agent has pleaded guilty to, has
entered a plea of nolo contendere to or has been convicted of
a violation under section 6271 (relating to operating without
license) or subsection A of section 37A of the act of June
28, 1947 (P.L.1110, No.476), known as the Motor Vehicle Sales
Finance Act.
(3) Subject to paragraph (4), if an applicant's license
was previously revoked under this chapter or the Motor
Vehicle Sales Finance Act, the department may not issue
another license to the applicant if, within ten years of the
date of license application, the applicant or the applicant's
affiliate, owner, partner, member, officer, director,
employee or agent has pleaded guilty to, has entered a plea
of nolo contendere to or has been convicted of any violation
of this chapter or the Motor Vehicle Sales Finance Act.
(4) If an applicant's license was previously revoked
under the Motor Vehicle Sales Finance Act solely on the basis
of the conduct of the applicant's spouse, paragraph (3) is
not applicable.
(c) License fee.--
(1) Except as provided in paragraph (2), if the
department rejects a license application or license renewal
application, it shall return the license fee that accompanied
the application.
(2) The department may retain all or part of the license
fee if the license application or license renewal application
was rejected based wholly or partially on false information
furnished by the applicant in the application.
§ 6218. Revocation or suspension of license.
(a) Grounds.--Upon notice under subsection (b), the
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department may revoke or suspend a license if it discovers a
fact or condition that, had it existed or been discovered at the
time of filing of any license application, would have warranted
disapproval of the application or if it finds that the licensee
has engaged in any of the following:
(1) Made a material misstatement in the license
application.
(2) Violated a provision of this chapter.
(3) Violated an order or regulation issued by the
department under and within the authority of this chapter.
(4) Failed to comply with a demand, order or regulation
of the department lawfully made by the department under and
within the authority of this chapter.
(5) Refused or refuses to permit the department to make
examinations authorized by this chapter.
(6) Failed to maintain in effect the bond required under
section 6213 (relating to bond), in the case of a sales
finance company and collector-repossessor.
(7) Failed to maintain satisfactory records required by
this chapter or prescribed by the department.
(8) Falsified records required by this chapter to be
maintained of the business contemplated by this chapter.
(9) Failed to file a report with the department within
the time stipulated in this chapter.
(10) Failed to pay the fine required by this chapter for
failure to file reports to the department within the time
stipulated.
(11) Defrauded a buyer to the buyer's damage or
willfully failed to perform a written agreement with a buyer.
(12) With respect to the tax or fee due the Commonwealth
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upon the sale of a motor vehicle:
(i) Failed to collect the tax or fee.
(ii) Collected the tax or fee and failed to issue a
true copy of the tax report to the purchaser, as required
by law.
(iii) Issued a false or fraudulent tax report or
copy thereof.
(iv) Failed to pay the tax or fee to the
Commonwealth at the time and in the manner required by
law.
(13) Engaged in unfair, deceptive, fraudulent or illegal
practices or conduct in connection with a business regulated
by this chapter, including making excessive mark-ups as set
forth in this chapter.
(b) Notice.--
(1) The department shall provide 30 days' written notice
to the licensee for a revocation or suspension of a license.
(2) The notice under this subsection shall be forwarded
by registered mail to the place of business of the licensee,
as shown in the license application or as amended on the
license certificate in case of change of address subsequent
to issuance of the license certificate.
§ 6219. Multiple places of business.
(a) License application.--A separate license application
under section 6212 (relating to initial license application)
shall be filed for each place of business conducted by or to be
established by a licensee within this Commonwealth.
(b) Bond.--A bond under section 6213 (relating to bond)
shall be filed for each place of business conducted by a sales
finance company and a collector-repossessor within this
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Commonwealth.
(c) License fee.--With respect to section 6214 (relating to
license fees), a separate license fee in the same amount shall
be paid for each place of business conducted by a licensee
within this Commonwealth.
(d) Requirements.--
(1) Except as provided in paragraph (2), only one place
of business may be operated under the same license.
(2) For an installment seller, only one license is
required if:
(i) every place of business is conducted under one
name; and
(ii) the business records are kept in one place.
(3) A licensee may operate more than one place of
business only after performing the following actions:
(i) Filing an application for each additional place
of business.
(ii) Furnishing a bond for each additional place of
business in the case of a sales finance company and
collector-repossessor.
(iii) Paying the respective license fee for each
place of business.
(e) License suspension and revocation.--
(1) Subject to paragraph (2), the department may revoke
or suspend only the particular license to which grounds exist
under section 6218(a) (relating to revocation or suspension
of license).
(2) If the department finds that grounds for revocation
are of general application to all places of business or more
than one place of business operated by a licensee, it may
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revoke all the licenses issued to the licensee or those
licenses to which grounds exist.
SUBCHAPTER C
INSTALLMENT SALE CONTRACTS
Sec.
6221. Requirements.
6222. Contents.
6223. Notice.
6224. Itemization.
6225. Disclosure.
6226. Heavy commercial motor vehicle.
6227. Manufactured homes.
6228. Prohibited provisions.
6229. Transfer.
6230. Statement of account to buyer.
6231. Payment receipts.
6232. Release of liens.
6233. Prohibited charges.
6234. Waiver of statutory protection prohibited.
6235. Effect of license expiration, surrender and revocation on
contracts.
6236. Enforcement.
§ 6221. Requirements.
(a) General rule.--An installment sale contract shall:
(1) be in writing;
(2) contain all the agreements between a buyer and an
installment seller relating to the installment sale of the
motor vehicle sold;
(3) be signed by the buyer and seller; and
(4) be complete as to all essential provisions before
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the buyer signs the contract.
(b) Copies.--
(1) The installment seller shall furnish an exact copy
of the installment sale contract without charge to the buyer
at the time the buyer signs the contract.
(2) The buyer's copy of the contract shall contain the
signature of the seller identical to the signature on the
original contract.
(3) Upon request, a holder shall furnish to the buyer a
duplicate copy of the contract upon payment of a reasonable
fee not to exceed the cost of production.
(c) Acknowledgment.--
(1) The installment seller shall obtain from the buyer a
written acknowledgment of the buyer's receipt of a copy of
the contract.
(2) The acknowledgment shall be:
(i) printed below the buyer's signature to the
contract, if attached to the contract; and
(ii) independently signed by the buyer.
(d) Equal periods and amounts.--An installment sale contract
shall provide for payment of the time balance in substantially
equal periods and amounts except in the following instances:
(1) The buyer expects his or her income to vary because
of seasonal employment, seasonal sales, use of accelerated
depreciation for tax purposes or other known causes, in which
case the contract may provide for payment of the time balance
in amounts that vary with the expected varying income.
(2) The sale of a heavy commercial motor vehicle.
(3) The sale of a motor vehicle to a salesperson
licensed under the act of December 22, 1983 (P.L.306, No.84),
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known as the Board of Vehicles Act.
(4) When the contract provides for fixed residual value
financing.
(e) Disclosures.--
(1) Prior to a buyer's execution of an installment sale
contract, an installment seller shall provide to the buyer an
oral and a written disclosure in plain language.
(2) The written disclosure shall:
(i) be separate from the contract to be signed by
the buyer;
(ii) be complete without any blank spaces; and
(iii) advise that the purchase of specific items
related to acquiring the motor vehicle is voluntary and
not required as a condition of the buyer's receiving the
installment sale contract loan. The items to which this
subparagraph applies:
(A) include a service contract, warranty, debt
cancellation agreement, debt suspension agreement and
insurance products not required by section 6241
(relating to insurance); and
(B) exclude an option or accessory physically
attached to the motor vehicle.
(3) The completed written disclosure shall be copied
exactly and furnished by the seller to the buyer at no cost
when the buyer receives a copy of the contract.
(f) Definition.--As used in this section, the term "fixed
residual value financing" means the manner of purchase whereby a
buyer listed as the owner on the motor vehicle title agrees, at
the conclusion of a predetermined schedule of installment
payments made in substantially equal periods and amounts, to:
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(1) satisfy the balance of the contractual amount owing;
(2) refinance any balance owing on the terms previously
agreed upon at the time of executing the installment sale
contract; or
(3) surrender the motor vehicle at the time and manner
agreed upon at the time of executing the contract.
§ 6222. Contents.
An installment sale contract shall contain the following:
(1) The full name and address of all the parties to the
contract.
(2) The date that the buyer signed the contract.
(3) A description of the motor vehicle sold, which shall
be sufficient for accurate identification.
(4) The notice under section 6223 (relating to notice).
(5) The following items in writing and in a clear and
conspicuous manner, with each component of each subparagraph
listed separately:
(i) The purchase price of the motor vehicle, which
shall include the following:
(A) Taxes.
(B) Charges for delivery.
(C) Charges for servicing, repairing or
improving the motor vehicle.
(D) Charges for a service contract, which:
(I) shall appear as separate items after the
following or substantially similar words, which
shall be boldface, underlined, adjacent to the
purchase price and in type print size not smaller
than that used for all item categories:
"including optional service contracts and/or
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extended warranties in the amount of"; or
(II) may be separately included as "other
charges" under subparagraph (v).
(E) Charges for accessories and installation.
(F) Other charges normally included in the
delivered purchase price of a motor vehicle.
(ii) The down payment made by the buyer at the time
of or prior to execution of the contract, which shall
separately indicate the extent to which it is made in
cash or represented by either or both of the following:
(A) The agreed-upon value of a trade-in motor
vehicle, along with a description of the trade-in
sufficient for accurate identification.
(B) Other goods.
(iii) The unpaid purchase price balance, which is
the difference between the following:
(A) The purchase price under subparagraph (i).
(B) The down payment under subparagraph (ii).
(iv) Insurance charges, the payment for which the
seller agrees to extend credit to the buyer, which shall
set forth the term of insurance, a concise description of
the coverage and the amount of the premium.
(v) Other charges necessary or incidental to the
sale or financing of a motor vehicle:
(A) which the seller contracts to retain,
receive or pay on behalf of the buyer; or
(B) for which the seller agrees to extend credit
to the buyer as authorized by this chapter, including
charges for a debt cancellation agreement and debt
suspension agreement.
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(vi) The principal amount financed, which is the sum
of the following:
(A) The unpaid purchase price balance under
subparagraph (iii).
(B) The insurance charges under subparagraph
(iv).
(C) The other charges under subparagraph (v).
(D) Amounts representing payment of a prior
credit or lease balance to discharge a security
interest, lien or lease interest on a motor vehicle
or other property traded or returned.
(vii) The finance charge, which is the consideration
in excess of the purchase price under subparagraph (i),
excluding insurance charges under subparagraph (iv) and
other charges under subparagraph (v), and which the buyer
agrees to pay to the seller for the privilege of
purchasing the motor vehicle under the installment sale
contract.
(viii) The time balance, which represents the total
obligation of the buyer and which is the sum of the
following:
(A) The principal amount financed under
subparagraph (vi).
(B) The finance charge under subparagraph (vii).
(ix) The payment schedule, which shall state the
number, amount and timing of the payments required to
liquidate the time balance.
(6) A description that reasonably identifies collateral
security in which a security interest is provided to secure
the buyer's obligation pursuant to 13 Pa.C.S. § 9108
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(relating to sufficiency of description), including the motor
vehicle and other collateral.
(7) A summary notice of the buyer's principal legal
rights regarding prepayment of the contract, rebate of
finance charge and reinstatement of the contract in the event
of repossession and notice of the right to receive the
statement of account under section 6230(a) (relating to
statement of account to buyer).
(8) Specific provisions regarding the following:
(i) The holder's right to accelerate the maturity of
the contract upon default or other breach of contract.
(ii) The buyer's liability respecting nonpayment.
(iii) The dollar or percentage amount of late
charges that may be imposed due to a late payment, other
than a deferral or extension charge.
(iv) Repossession and sale of the motor vehicle, in
case of default or other breach of contract.
(9) The following statement:
If you encounter a problem, you may have additional rights
under the Unfair Trade Practices and Consumer Protection Law,
which is enforced by the Pennsylvania Office of Attorney
General, Bureau of Consumer Protection.
§ 6223. Notice.
(a) Requirement.--An installment sale contract shall contain
the notice under subsection (b), which shall be printed directly
above the space provided for the signature of the buyer.
(b) Form.--
(1) Except as provided in paragraph (2), the notice
shall be in the following form:
NOTICE TO BUYER: Do not sign this contract in blank. You
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are entitled to an exact copy of the contract you sign.
Keep it to protect your legal rights. Any holder of this
consumer credit contract is subject to all claims and
defenses which the buyer could assert against the seller
of goods or services obtained pursuant hereto or with the
proceeds hereof. Recovery hereunder by the buyer shall
not exceed amounts paid by the buyer hereunder.
(2) In the notice, the words "lessee" or "mortgagor" may
be substituted for the word "buyer," and the words "lease" or
"mortgage" may be substituted for the word "contract."
§ 6224. Itemization.
Costs and charges under sections 6222 (relating to contents)
and 6242 (relating to other costs included in amount financed)
shall be separately itemized in an installment sale contract as
to their nature and amounts.
§ 6225. Disclosure.
If an installment seller retains a portion of the charge for
a good or service provided by another person, the seller shall
disclose that the seller may retain a portion of the charge.
§ 6226. Heavy commercial motor vehicle.
(a) Variable finance charge percentage rate.--
Notwithstanding any provision of law to the contrary, the
finance charge percentage rate included in an installment sale
contract for the sale of a heavy commercial motor vehicle may
vary during the term of the contract pursuant to a formula or
index set forth in the contract that is made readily available
to and verifiable by the buyer and beyond the control of the
holder of the contract.
(b) Determinations.--Notwithstanding that the finance charge
percentage rate may increase or decrease over the term of the
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contract according to a formula or index set forth in the
contract, the rate applicable to the transaction as of the date
of execution of the contract may be used to determine the
following:
(1) The amount of finance charge under section 6222(5)
(vii) (relating to contents).
(2) The time balance under section 6222(5)(viii).
(3) The payment schedule under section 6222(5)(ix).
§ 6227. Manufactured homes.
(a) Optional contract provisions.--An installment sale
contract for the sale of a manufactured home may:
(1) require the buyer to pay real estate taxes that may
thereafter be levied upon the manufactured home and furnish
the installment seller or holder with proof of payment of
real estate taxes in the manner that the contract prescribes;
and
(2) upon the buyer's failure to pay the real estate
taxes or furnish the required proof of payment, allow the
seller or holder to accelerate payments or repossess the
manufactured home, or both.
(b) Sale.--If the manufactured home is sold by a tax-
levying unit of government for nonpayment of real estate taxes
by the buyer, the following is not affected or divested:
(1) A lien or encumbrance contained in the title of the
vehicle pursuant to 75 Pa.C.S. (relating to vehicles).
(2) An encumbrance filed of record against the vehicle
under the provisions of 13 Pa.C.S. (relating to commercial
code).
§ 6228. Prohibited provisions.
An installment sale contract may not contain any of the
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following:
(1) Blank spaces to be filled in after the contract has
been signed, except regarding serial numbers or other
identifying marks that are not available for description of
the motor vehicle at the time of execution of the contract.
(2) An acceleration clause under which all or part of
the time balance represented by payments not yet matured may
be declared immediately payable because the installment
seller or holder deems itself to be insecure. This paragraph
does not apply to an acceleration clause authorizing the
seller or holder to declare the entire time balance due and
payable in case of any of the following:
(i) The buyer's default in the payment of one or
more installment payments.
(ii) The buyer's failure to pay taxes levied against
the motor vehicle.
(iii) The buyer's failure to furnish proof of
payment of taxes levied against the motor vehicle.
(iv) Use of the motor vehicle for illegal purposes.
(v) The buyer's filing for bankruptcy.
(vi) The buyer's default in the payment of a cross-
collateralized obligation.
(vii) The buyer's intentionally providing fraudulent
and misleading information on a credit application.
(3) A provision authorizing a person acting on behalf of
the seller or holder to enter upon the premises of the buyer
unlawfully or to commit a breach of the peace in the
repossession of the motor vehicle or collateral security.
(4) A provision whereby the buyer waives a right of
action against the seller, holder, collector-repossessor or
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other person acting on behalf of the holder for an illegal
act committed in the collection of payments under the
contract or in the repossession of the motor vehicle or
collateral security.
(5) A provision whereby the buyer executes a power of
attorney appointing the seller, the holder, a collector-
repossessor or the agent of any of them as the buyer's agent
in the collection of payments under the contract or in the
repossession of the motor vehicle or collateral security.
This paragraph does not apply to a power of attorney issued
by the buyer to an attorney-at-law to be used only in the
collection of the obligation by legal process.
(6) A provision relieving the holder or other assignee
from liability for legal remedies that the buyer may have had
against the seller under the contract or a separate
instrument executed in connection with the contract.
(7) A provision requiring or entailing the execution of
a note or series of notes by the buyer, which when separately
negotiated will extinguish as to third parties a right of
action or defense that the buyer may have against the
original seller.
§ 6229. Transfer.
(a) Installment seller.--An installment seller of a motor
vehicle under an installment sale contract executed in this
Commonwealth may not sell, transfer or assign the obligation
represented by the contract to a person in this Commonwealth or
elsewhere unless the person is licensed as a sales finance
company under this chapter.
(b) Sales finance company.--A sales finance company licensed
under this chapter may not sell, transfer or assign the
20110HB1393PN1641 - 37 -
obligation represented by an installment sale contract executed
in this Commonwealth, which it has lawfully acquired, to a
person in this Commonwealth or elsewhere unless the person is
licensed as a sales finance company under this chapter.
(c) Notice; effect on subsequent holder.--If an installment
sale contract is lawfully sold, transferred or assigned to a
person who is licensed as a sales finance company under this
chapter, the buyer's payment or tender of payment made to, and
service of notice on, the last known holder is binding on a
subsequent holder until the new holder furnishes to the buyer a
written notice of the sale, transfer or assignment that sets
forth the name and address of the new holder authorized to
receive future payments on the contract.
(d) Default; notice; effect on subsequent holder.--
(1) If an installment sale contract lawfully acquired by
a sales finance company is in default, the holder may resell,
retransfer or reassign the contract to the installment seller
from whom the contract was originally acquired.
(2) The buyer's payment or tender of payment made to and
service of notice on the last known holder is binding on a
subsequent holder until the new holder furnishes to the buyer
a written notice of the resale, retransfer or reassignment
that sets forth the following:
(i) The name and address of the new holder
authorized to receive future payments on the contract.
(ii) The unpaid time balance.
(iii) The accrued late charges due under the
contract.
(e) Applicability.--
(1) This section does not apply to an assignment of an
20110HB1393PN1641 - 38 -
aggregation of installment sale contracts:
(i) which is executed by a seller or sales finance
company only as a security interest securing payment or
performance of a bona fide commercial loan, obtained at
lawful rates of interest from a person regularly engaged
in the business of lending money on the security of the
assigned collateral or amounts due pursuant to a security
or debt instrument; and
(ii) under which, in the absence of default or other
bona fide breach of the loan contract:
(A) ownership of the assigned contracts remains
vested in the assignor; and
(B) collection of payments on the assigned
contracts is made by the assignor.
(2) An assignment of an aggregation of loan contracts
under this section may not be for the purpose of evading or
circumventing the provisions of this chapter.
§ 6230. Statement of account to buyer.
(a) Information to be included.--At any time after the
execution of an installment sale contract and within one year
after the termination of the contract, a holder of the contract
shall furnish to the buyer upon request a complete and detailed
statement of account showing the following:
(1) All amounts paid by the buyer on account of the
obligation, dates of payment and the allocation of the
payments to the reduction of:
(i) The time balance.
(ii) Refinance charges.
(iii) Late charges.
(iv) Court costs.
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(v) Attorney fees.
(vi) The costs of retaking, repairing and storing
the motor vehicle.
(vii) Other costs permitted under the provisions of
this chapter and the contract.
(2) All amounts credited to the buyer as rebates for
prepayment and unexpired premiums on canceled insurance.
(3) The amount of the installment payments, accrued
charges and expenses incurred, which are due and payable.
(4) The number, amount and due dates of installment
payments to become due and payable.
(b) Copies.--
(1) The buyer shall be furnished with one statement of
account without charge during the term of the contract or
within one year after the termination of the contract.
(2) Upon request and payment of a reasonable fee not to
exceed the cost of production, a holder shall furnish to the
buyer an additional statement of account.
§ 6231. Payment receipts.
(a) When necessary.--When payment is made on an installment
sale contract, the person receiving the payment shall, at the
time of receiving the payment, furnish a complete written
payment receipt to the buyer or individual making the payment on
behalf of the buyer if:
(1) the buyer requests such receipt; or
(2) payment is made in cash.
(b) Contents.--The payment receipt shall contain the
following:
(1) The date, amount and nature of the payment.
(2) An identification of the obligation to which the
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payment is applicable.
(3) The signature or initials of the person receiving
the payment on behalf of the holder.
(4) The unpaid time balance remaining due after
crediting the payment.
(5) The amount attributed to late charges, independent
of the payment applied to the reduction of the time balance.
(c) Self-addressed stamped envelope.--The holder may require
the buyer to supply a self-addressed stamped envelope as a
condition of mailing the receipt if the buyer:
(1) elects to make a payment by mail; and
(2) is previously notified of the need for the envelope.
§ 6232. Release of liens.
(a) Duty of holder.--Upon payment in full of the time
balance and other amounts lawfully due under an installment sale
contract, a holder shall perform the following:
(1) Upon request, return to the buyer all instruments in
the form maintained by the holder, except those filed or
recorded with a public official and retained in the files of
the official, which:
(i) evidence the buyer's indebtedness or constitute
security under the contract; and
(ii) were signed by the buyer or the buyer's surety
or guarantor, in conjunction with the contract.
(2) Specify on the instruments under paragraph (1) that
the buyer's obligation has been paid in full.
(3) Release all security interests in the motor vehicle
or collateral security for the obligation of the buyer under
the contract.
(4) Deliver to the buyer any assignments and documents
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of title as may be necessary to vest the buyer with complete
evidence of title.
(b) Delivery of certificate of title.--The certificate of
title for the motor vehicle shall be delivered to the buyer
within ten days of the date of tender of payment in full by mail
or other arrangements made between the buyer and holder.
§ 6233. Prohibited charges.
(a) General rule.--Except as provided in subsections (b) and
(c), a licensee may directly or indirectly charge, contract for,
collect or receive from the buyer, in connection with the retail
sale of a motor vehicle under an installment sale contract,
insurance charges, other charges necessary or incidental to the
sale of the motor vehicle, finance charges, refinance charges,
late charges, recording and satisfaction fees, court costs,
attorney fees and costs of retaking, repairing and storing a
repossessed motor vehicle, which are disclosed as required by
section 6222(5) (relating to contents).
(b) Exception.--A licensee may not directly or indirectly
charge, contract for, collect or receive from the buyer, in
connection with the retail sale of a motor vehicle under an
installment sale contract, any further or other amount for
costs, charges, examination, appraisal, service, brokerage,
commission, expense, interest, discount, fees, fines, penalties
or other thing of value in excess of the amounts permitted under
subsection (a) or (c).
(c) Manufactured homes.--An installment seller of a
manufactured home may charge appraisal fees, brokerage fees and
commissions, if they represent actual charges and are properly
disclosed to the buyer.
(d) Charges if contract not consummated.--
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(1) Subject to paragraph (2), a licensee may not collect
a charge in connection with a contemplated sale of a motor
vehicle under an installment sale contract if the contract is
not consummated.
(2) Paragraph (1) does not affect the legal status of a
deposit paid by a prospective buyer to a seller as a binder
on the contemplated purchase of a motor vehicle.
(e) Unenforceable provision.--If an installment sale
contract contains a provision that authorizes a prohibited
charge, the provision is unenforceable.
§ 6234. Waiver of statutory protection prohibited.
(a) General rule.--A buyer may not validly waive through an
action, agreement or statement any provision of this chapter
intended to protect a buyer of a motor vehicle.
(b) Choice of law.--A buyer's waiver of the provisions of
this chapter, including any purported waiver effected by a
contractual choice of the law of another jurisdiction contained
in an installment sale contract, shall be deemed contrary to
public policy and is void and unenforceable.
§ 6235. Effect of license expiration, surrender and revocation
on contracts.
(a) Effect.--The expiration, surrender or revocation of a
license issued under this chapter to an installment seller or
sales finance company does not impair or affect the obligation
under an installment sale contract entered into lawfully or
lawfully acquired by the licensee prior to the effective date of
the expiration, surrender or revocation of the license.
(b) Charges by holder prohibited.--A holder of an
installment sale contract forfeits the right to charge, contract
for, receive or collect refinance charges authorized by this
20110HB1393PN1641 - 43 -
chapter for renewal of the contract, if the holder's license has
expired, was surrendered or was revoked prior to the date of the
renewal.
(c) Sale, transfer and assignment of contracts.--A licensee
whose license has expired, was surrendered or was revoked may
sell, transfer or assign contracts entered into or acquired
prior to the expiration, surrender or revocation to a licensed
sales finance company, which may renew the contracts in
accordance with the provisions of this chapter.
(d) Prohibitions regarding contracts.--A licensee whose
license has expired, was surrendered or was revoked may not:
(1) enter into new contracts for the retail sale of
motor vehicles under installment sale contracts; or
(2) discount, purchase or otherwise acquire the new
contracts.
§ 6236. Enforcement.
(a) When obligation unenforceable.--An obligation of the
buyer of a motor vehicle under an installment sale contract that
was consummated in this Commonwealth is not enforceable in this
Commonwealth if:
(1) the installment seller was not licensed under this
chapter when the seller entered into the contract; or
(2) the holder was not licensed under this chapter when
the holder acquired the contract.
(b) Cancellation of contract; release of liens.--Upon
payment or tender of payment to the holder of the principal
amount financed under the contract described in subsection (a),
less payments on account of the obligation exclusive of down
payment which had been made previously, the buyer under the
contract is entitled to:
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(1) cancellation of the contract; and
(2) release of all liens against:
(i) the motor vehicle sold under the contract; and
(ii) collateral security owned by the buyer or the
buyer's surety or guarantor.
(c) Applicability.--This section shall not be construed to
prevent the enforcement in this Commonwealth of an obligation
arising from the sale of a motor vehicle made outside this
Commonwealth under an installment sale contract entered into or
executed by the buyer outside this Commonwealth, whether or not
the buyer was a resident of this Commonwealth at the time the
buyer entered into the contract.
SUBCHAPTER D
COSTS AND CHARGES
Sec.
6241. Insurance.
6242. Other costs included in amount financed.
6243. Finance charges.
6244. Refinance charges.
6245. Late charges.
6246. Refund for prepayment of contract.
§ 6241. Insurance.
(a) General rule.--
(1) The insurance purchased under this section shall be:
(i) Limited to insurance against risk of damage,
destruction or theft of the motor vehicle.
(ii) Written for the dual protection of the buyer
and installment seller or holder to the extent of their
respective interests in the motor vehicle.
(iii) Subject to terms and conditions, including the
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amount and period of time, that are reasonable and
appropriate considering the type and condition of the
motor vehicle, the amount of the time balance and the
schedule of payments in the installment sale contract.
(2) The provisions of paragraph (1) may not interfere
with the following:
(i) The liberty of contract of the buyer and
installment seller to contract for other or additional
insurance as security for, or by reason of the obligation
of, the buyer.
(ii) The inclusion of charges for insurance in the
principal amount advanced under the installment sale
contract.
(b) Purchase by buyer.--
(1) An installment seller may require a buyer of a motor
vehicle under an installment sale contract to purchase
insurance on the motor vehicle at the buyer's expense from an
insurance company acceptable to the installment seller.
(2) The buyer may select the insurance company agent or
broker, in which case the inclusion of insurance charges in
the contract shall be at the option of the installment
seller.
(c) Purchase by installment seller generally.--If an
installment seller or a holder contracts to purchase at the
buyer's expense insurance on a motor vehicle sold under an
installment sale contract, the following apply:
(1) The insurance shall be purchased through an agent or
broker authorized to conduct business in this Commonwealth.
(2) The insurance shall be written by an insurance
company qualified to do business in this Commonwealth.
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(3) The status of the buyer and installment seller or
holder, as set forth in the insurance contract, shall reflect
their respective interests in the motor vehicle.
(4) The insurance charges to the buyer may not exceed
the following:
(i) The insurance charges that others are required
to pay to the insurance company for similar coverage.
(ii) The limitations on premiums, commissions and
other charges established by the Commonwealth.
(5) A copy of the policy or certificate of insurance
shall be delivered to the buyer within 30 days of the date of
the buyer's signing of the contract.
(6) The insurance policy shall contain the following:
(i) Complete information as to the effective dates,
amounts of premiums and coverage.
(ii) All the terms of the insurance contract.
(7) If a certificate of insurance issued under a master
policy is furnished to the buyer in lieu of an individual
policy, the certificate shall contain the following:
(i) Complete information as to effective dates,
amounts of premiums and coverage.
(ii) All the terms of the insurance contract
embodied in the master policy to the same extent as would
appear if an individual policy were issued.
(iii) Notice that it is not an insurance policy.
(d) Early termination of policy.--
(1) This subsection applies if an installment seller or
holder has placed insurance at the buyer's expense on a motor
vehicle sold under an installment sale contract.
(2) If the buyer prepays the time balance under the
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contract prior to the expiration date of the insurance:
(i) The insurance shall remain in force unless the
buyer requests cancellation of the insurance.
(ii) The installment seller or holder may not cancel
the insurance without the buyer's consent.
(iii) The installment seller or holder may not
coerce the buyer to cancel the insurance.
(iv) Any unexpired insurance premiums received by
the installment seller or holder, resulting from
cancellation of insurance originally placed at the
buyer's expense, shall be paid to the buyer or credited
to matured unpaid installments under the contract.
(3) If the insurance company cancels the insurance prior
to expiration, the installment seller or subsequent holder
shall:
(i) obtain comparable insurance from another
insurance company and furnish the buyer with a copy of
the insurance policy, subject to the same requirements of
this chapter applicable to the original policy; or
(ii) if unable to obtain comparable insurance from
another insurance company, immediately notify the buyer
who may then obtain insurance from an insurance company,
agent or broker of the buyer's own selection, in which
case the installment seller or holder shall be liable to
the buyer for the following:
(A) Any additional insurance charges incurred by
the buyer in rewriting the insurance for the
unexpired period for which the original insurance was
written.
(B) Any loss suffered by the buyer through
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negligence on the part of the installment seller or
holder in promptly advising the buyer of the
inability to obtain replacement insurance.
§ 6242. Other costs included in amount financed.
(a) Costs payable by buyer.--An installment seller of a
motor vehicle under an installment sale contract may require the
buyer to pay the following other costs incurred in the sale of a
motor vehicle under the contract:
(1) Fees payable to the Commonwealth for filing a lien
or encumbrance on the certificate of title to a motor vehicle
sold under the contract or collateral security for the motor
vehicle.
(2) Fees payable to a public official for filing,
recording, satisfying or releasing the contract or
instruments securing the buyer's obligation.
(3) Fees for notarization required in connection with
the filing, recording, satisfying or releasing a mortgage,
judgment lien or encumbrance.
(b) Costs for which buyer voluntarily contracts.--The
installment seller of a motor vehicle under an installment sale
contract may contract with the buyer to pay on behalf of the
buyer the following other incidental costs relating to the sale
of the motor vehicle, for which the buyer has voluntarily
contracted:
(1) Fees payable to the Commonwealth for registration of
the motor vehicle and issuance or transfer of registration
plates.
(2) Fees payable to the Commonwealth for the buyer's
driver's license.
(3) Costs of messenger service and other costs
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associated with the submission of documents to the
Commonwealth or other governmental entity.
(4) Licensing costs under section 27.1 of the act of
December 22, 1983 (P.L.306, No.84), known as the Board of
Vehicles Act.
(c) Collection and credit for fees and costs.--With respect
to the fees and costs under subsections (a) and (b), the
installment seller may:
(1) contract for, collect or receive the fees and costs
from the buyer independently of the contract; or
(2) extend credit to the buyer for the fees and costs
and include them in the principal amount financed under the
contract.
(d) Amount of fees and costs.--Unless otherwise permitted by
the laws of this Commonwealth, the fees and costs under
subsections (a) and (b) that are paid or payable by the buyer
may not exceed the amount that the installment seller expends or
intends to expend for them.
(e) Costs not disbursed.--Costs that are collected from a
buyer or included in the buyer's obligation under an installment
sale contract but that are not disbursed by the seller as
contemplated shall be immediately refunded or credited to the
buyer.
(f) Incidental charges.--
(1) Subject to paragraph (2), the installment seller of
a motor vehicle under an installment sale contract may
contract with the buyer to pay on behalf of the buyer other
charges necessary or incidental to the sale of a motor
vehicle and contracted for by the buyer, if the charges are
not:
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(i) in violation of section 6218(a)(12) (relating to
revocation or suspension of license); or
(ii) restricted under this chapter or any other
statute.
(2) Only the costs of necessary repairs disclosed at the
time of the installment sale may be included in the contract.
Necessary repairs arising after the execution of the contract
may not be added to the original contract.
(3) This subsection does not otherwise authorize the
mark-up of costs under subsection (a) or (b).
§ 6243. Finance charges.
(a) General rule.--An installment seller licensed under this
chapter may charge, contract for, receive or collect a finance
charge under this chapter on an installment sale contract
covering the retail sale of a motor vehicle in this
Commonwealth.
(b) Method of computation.--
(1) An installment seller may compute a finance charge
authorized by this section by any method, if the charge does
not exceed the applicable maximum percentage under
subsections (d) and (e).
(2) A finance charge under this section shall be
computed:
(i) On the principal amount financed as determined
under section 6222(5)(vi) (relating to contents).
(ii) At the annual rate indicated on a one-year
installment sale contract.
(iii) Proportionately on an installment sale
contract that extends for a period that is less than or
greater than one year.
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(3) A finance charge under this section may be computed
on the basis of a full month for a fractional month period in
excess of ten days and interest may continue to be charged
during a period of time for which a late charge is also
imposed.
(c) Manufactured homes.--If an installment sale contract
involves a manufactured home, whether or not the sale on credit
or loan is insured or guaranteed in whole or in part by the
Federal Housing Administration pursuant to the National Housing
Act (48 Stat. 1246, 12 U.S.C. § 1701 et seq.), the percentage
established as a maximum finance charge for a manufactured home
by regulation of the Federal Housing Administration shall
govern.
(d) New motor vehicles--.
(1) Except as otherwise provided in this section, a
finance charge for a new motor vehicle may not exceed the
equivalent of 18% simple interest per year on the unpaid
balance.
(2) Except as provided in paragraph (3), a finance
charge for a new motor vehicle having a purchase price of
$10,000 or more and used primarily for a commercial purpose
may not exceed the equivalent of 7.5% per year.
(3) A finance charge may not exceed the equivalent of
10% per year for the following:
(i) A new truck and truck tractor having a
manufacturer's gross vehicular weight of 13,000 pounds or
more.
(ii) A new semitrailer and trailer designed for use
in combination with a truck tractor.
(e) Used motor vehicles.--
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(1) A finance charge for a used motor vehicle, of a
model designated by the manufacturer during a year not more
than two years prior to the year in which the sale is made,
may not exceed the equivalent of 18% simple interest per year
on the unpaid balance.
(2) A finance charge for an older used motor vehicle, of
a model designated by the manufacturer during a year more
than two years prior to the year in which the sale is made,
may not exceed the equivalent of 21% simple interest per year
on the unpaid balance.
(f) Federally insured loans.--Subject to subsection (c), if
a sale on credit or loan is insured or guaranteed in whole or in
part by the Department of Veterans Affairs or another Federal
department or agency, the laws or regulations that govern the
Department of Veterans Affairs or other Federal department or
agency regarding the maximum finance charge and rate of interest
for the sale shall govern.
§ 6244. Refinance charges.
(a) General rule.--
(1) A holder of an installment sale contract may:
(i) extend the scheduled due date or defer the
scheduled payment of all or part of an unpaid installment
payment;
(ii) renew the unpaid time balance of the contract;
or
(iii) contract for, receive and collect a refinance
charge for an extension, deferment or renewal under
subparagraphs (i) and (ii).
(2) A refinance charge for a motor vehicle under section
6243(d) and (e) (relating to finance charges) may not exceed
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the amount determined under this section.
(b) Rates and computation.--
(1) For a motor vehicle under section 6243(d)(1) and
(e), the refinance charge shall be determined by either of
the following:
(i) Subject to subsection (c), the refinance charge
on the amount of a refinanced full or partial installment
payment for which each full or partial payment is
extended or deferred may not exceed the equivalent of the
following rates:
(A) One percent per month for a vehicle under
section 6243(d)(1).
(B) One and one-half percent per month for a
vehicle under section 6243(e)(1).
(C) Two percent per month for a vehicle under
section 6243(e)(2).
(ii) Subject to subsection (d), the refinance charge
on the amount obtained shall be determined by:
(A) Adding the unpaid time balance of the
contract, insurance charges, other charges incidental
to refinancing and unpaid late charges that may be
accrued.
(B) Deducting a rebate that may be due to the
buyer for prepayment incidental to refinancing, at
the rate of the finance charge in the original
contract, for the term of the renewal contract and
subject to the provisions of this chapter governing
computation of the original finance charge.
(2) For a motor vehicle under section 6243(d)(2) and
(3), the refinance charge shall be determined by the method
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of computation under paragraph (1)(ii).
(3) For a manufactured home under section 6243(c), the
refinance charge shall be determined by regulation of the
Federal Housing Administration pursuant to the National
Housing Act (48 Stat. 1246, 12 U.S.C. § 1701 et seq.).
(4) Subject to paragraph (3), if the refinancing of a
motor vehicle is insured or guaranteed in whole or in part by
the Department of Veterans Affairs or another Federal
department or agency, the laws or regulations that govern the
Federal department or agency regarding the maximum refinance
charge and rate of interest for the refinancing shall govern.
(c) Fractional month.--A computed refinance charge under
subsection (b)(1) may be computed on the basis of a full month
for any fractional month period in excess of ten days.
(d) Other provisions not applicable to computation.--The
provisions of this chapter governing minimum prepayment rebate
shall not apply in calculating refinance charges on the contract
renewed under subsection (b)(2).
(e) Prohibited contents.--Except as provided in subsection
(f) and subject to subsection (g), the holder of an installment
sale contract may not include in a refinancing contract a cash
loan to the buyer or credit extended to the buyer incidental to
the purchase of goods or services.
(f) Permissible contents.--A holder under subsection (e) may
include the following in the refinance contract:
(1) Charges for accessories, equipment and parts for the
motor vehicle sold under the contract.
(2) Charges for repairs and services to the motor
vehicle.
(3) Finance charges.
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(g) Loan.--
(1) A loan under subsection (e) shall not include and
nothing in this chapter shall be construed to otherwise
prohibit a rearrangement of payments under an installment
sale contract by a refinance transaction involving a
restoration of certain installment payments made under the
contract.
(2) A refinance charge on an amount restored pursuant to
paragraph (1) may not exceed the equivalent of 6% simple
interest per year.
§ 6245. Late charges.
(a) General rule.--A late charge may be collected on the
following:
(1) An installment payment that is not paid on or before
the due date of the payment.
(2) A contract subject to this chapter, regardless of
the classification of vehicle under section 6243 (relating to
finance charges) or the method by which the finance charge is
computed.
(b) Rate and computation.--
(1) Under a contract for the sale of a motor vehicle
other than a heavy commercial motor vehicle, a late charge
may not, for any payment not made within ten days of its
scheduled due date, exceed the rate of 2% on the amount of
the payment in arrears.
(2) Under a contract for the sale of a heavy commercial
motor vehicle, a late charge may not, for any payment not
made within ten days of its scheduled due date, exceed the
rate of 4% of the amount of the payment in arrears.
(3) The late charges under paragraphs (1) and (2) may be
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collected only once on each payment in arrears.
(c) Collection.--
(1) Late charges may be:
(i) collected when earned during the term of a
contract for the sale of a motor vehicle; or
(ii) accumulated and collected at final maturity or
at the time of final payment under a contract for the
sale of a motor vehicle.
(2) A late charge may not be collected on a payment in
default because of an acceleration provision in the contract.
§ 6246. Refund for prepayment of contract.
(a) Right to prepay unpaid time balance.--Notwithstanding
the provisions of an installment sale contract, a buyer may
prepay at any time all or part of the unpaid time balance under
the contract.
(b) Rebate generally.--If the entire time balance is
liquidated prior to maturity by prepayment, refinancing or
termination by surrender or repossession and resale of the motor
vehicle, a holder of the contract for the sale of the motor
vehicle shall immediately rebate to the buyer any unearned
portion of the finance charge. The rebate may be made in cash or
credited to the amount due on the obligation of the buyer.
(c) Rebate amount.--
(1) Subject to paragraph (2), the proportion of the
unearned finance charge that shall be rebated to the buyer to
the total finance charge shall be at least the proportion of
the sum of the periodic time balances after the date of
prepayment to the sum of all the periodic time balances under
the schedule of payments in the original contract.
(2) The holder is not required to rebate:
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(i) a portion of the unearned finance charge that
results in a net minimum finance charge on the contract
of less than $10; or
(ii) an unearned finance charge if the computed
amount due is less than $1.
SUBCHAPTER E
REPOSSESSION
Sec.
6251. Repossession authorized.
6252. Who may repossess.
6253. Legal proceedings.
6254. Notice of repossession.
6255. Personal property in repossessed motor vehicle.
6256. Buyer's liability for costs.
6257. Notice to police.
6258. Reinstatement of contract after repossession.
6259. Redemption and termination of contract after
repossession.
6260. Sale of motor vehicle after repossession.
6261. Deficiency judgment.
6262. Procedures for manufactured homes.
§ 6251. Repossession authorized.
(a) When repossession may occur.--An installment seller or a
holder, who has lawfully acquired a motor vehicle installment
sale contract, may retake possession of the motor vehicle if the
buyer:
(1) is in default in the payment of an amount due under
the contract; or
(2) has committed another breach of contract, which is
by the contract specifically made a ground for retaking the
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motor vehicle.
(b) Legal process.--
(1) Unless the motor vehicle can be retaken without
breach of the peace, it shall be retaken by legal process.
(2) This subchapter shall not be construed to authorize
a violation of the criminal laws of this Commonwealth.
(c) Limitation.--Except as provided in this chapter, in a
transaction involving a commercial purpose, the provisions of
this chapter regarding repossession of a motor vehicle are
limited by the provisions of 13 Pa.C.S. Div. 9 (relating to
secured transactions).
§ 6252. Who may repossess.
(a) With legal process.--Repossession of a motor vehicle
when effected by legal process shall be made only by a duly
constituted public official.
(b) Without legal process.--Repossession of a motor vehicle
when effected otherwise than by legal process under subsection
(a) shall be made only by the following:
(1) The holder.
(2) An official or full-time employee of the holder.
(3) A collector-repossessor licensed under this chapter.
(4) The person who originally sold the motor vehicle to
the buyer under the installment sale contract.
(5) A licensed seller or sales finance company that is
not regularly engaged in the business of repossessing motor
vehicles but occasionally does so as an accommodation for
another seller or sales finance company.
(6) An official or full-time employee of a licensed
seller or sales finance company under paragraph (5).
§ 6253. Legal proceedings.
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(a) When to commence action.--If repossession and sale of a
motor vehicle subject to an installment sale contract or its
collateral security is effected by legal process, the holder may
commence legal proceedings immediately upon the buyer's default
or breach of the contract.
(b) Rights and duties of buyer.--In a proceeding under
subsection (a), the buyer shall receive notice, have the rights
and be liable for the costs of suit and reasonable attorney fees
as provided by the laws of this Commonwealth governing legal
proceedings.
§ 6254. Notice of repossession.
(a) General rule.--If repossession of a motor vehicle
subject to an installment sale contract is effected other than
by legal process, the holder shall immediately furnish the buyer
with a written notice of repossession.
(b) Delivery.--The notice of repossession shall be delivered
in person or sent by registered or certified mail to the last
known address of the buyer.
(c) Contents.--The notice of repossession shall contain the
following:
(1) The buyer's right to reinstate the contract, if the
holder extends the privilege of reinstatement and redemption
of the motor vehicle.
(2) An itemized statement of the total amount required
to redeem the motor vehicle by reinstatement or payment of
the contract in full.
(3) Notice to the buyer of the holder's intent to resell
the motor vehicle at the expiration of 15 days from the date
of mailing the notice.
(4) The place where the motor vehicle is stored.
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(5) The name and address of the person to whom the buyer
shall make payment or on whom the buyer may serve notice.
(6) A statement that any personal property left in the
repossessed vehicle will be held for 30 days from the date of
the mailing of the notice.
(7) The name and address of the person that the buyer
may contact to receive a full statement of account as
provided by section 6230 (relating to statement of account to
buyer).
§ 6255. Personal property in repossessed motor vehicle.
A buyer may reclaim personal property left in the repossessed
motor vehicle within 30 days of the mailing of the notice under
section 6254 (relating to notice of repossession). If personal
property is left in the motor vehicle after the 30-day time
period, the holder may dispose of the personal property in any
manner that it chooses.
§ 6256. Buyer's liability for costs.
If repossession of a motor vehicle subject to an installment
sale contract is effected other than by legal process, the buyer
shall be liable for costs incurred by the holder in retaking,
storing and repairing the motor vehicle only if:
(1) The default exceeds 15 days at the time of
repossession.
(2) The costs are actual, necessary and reasonable,
excluding repossession costs for services by an individual
who is a regular full-time employee of the holder.
(3) The costs are supported by receipts or other
satisfactory evidence of payment.
(4) The records of the holder show detailed information
as to the nature and amount of each cost, the date of payment
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and the recipient of the payment.
§ 6257. Notice to police.
The repossessor of a motor vehicle shall give notice within
24 hours after the repossession to:
(1) the local municipal police department having
jurisdiction of the area where the motor vehicle was located
at the time of repossession; or
(2) the Pennsylvania State Police, if no municipal
police jurisdiction exists.
§ 6258. Reinstatement of contract after repossession.
(a) When reinstatement may occur.--If a motor vehicle
subject to an installment sale contract has been repossessed by
legal process or otherwise because of default or other breach of
contract, the holder may reinstate the contract and return the
motor vehicle to the buyer if the buyer:
(1) pays all past due installments; or
(2) makes mutually satisfactory arrangements with the
holder regarding the following:
(i) Accrued late charges.
(ii) Costs of suit under the contract and authorized
by this chapter in repossession by legal process.
(iii) The costs of retaking, repairing and storing
under section 6256 (relating to buyer's liability for
costs), if default at the time of repossession exceeds 15
days.
(b) Refinancing.--If an installment sale contract for a
motor vehicle is reinstated after repossession, the holder may
contemporaneously or subsequently enter into a contract with the
buyer for refinancing the obligation as provided in this
chapter.
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§ 6259. Redemption and termination of contract after
repossession.
(a) Retaining motor vehicle.--Unless the right of redemption
is waived in a nonconsumer transaction under 13 Pa.C.S. §
9624(c) (relating to waiver), if repossession of a motor vehicle
subject to an installment sale contract is effected within or
outside this Commonwealth other than by legal process, the
holder shall retain the repossessed motor vehicle for a period
of 15 days after the mailing of the notice of repossession under
section 6254 (relating to notice of repossession).
(b) Redemption.--During the 15-day period after the mailing
of the notice of repossession, the buyer may redeem the motor
vehicle and terminate the installment sale contract by payment
or tender of payment to the holder of the following amounts:
(1) If default at the time of repossession is 15 days or
less, the sum of the following, less rebate of any unearned
finance charge and excluding the costs of retaking, repairing
and storing under section 6256 (relating to buyer's liability
for costs):
(i) The unpaid time balance.
(ii) Accrued late charges authorized by this
chapter.
(iii) Any other amount lawfully due under the
contract.
(2) If default at the time of repossession exceeds 15
days, the sum of the following, less rebate of any unearned
finance charge:
(i) The unpaid time balance.
(ii) Accrued late charges authorized by this
chapter.
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(iii) The costs of retaking, repairing and storing
under section 6256.
(iv) Any other amount lawfully due under the
contract.
(c) Return of motor vehicle and collateral.--
(1) If the buyer redeems the motor vehicle and
terminates the installment sale contract by payment or tender
as provided in subsection (b), the holder shall return the
motor vehicle and other collateral in a manner consistent
with 13 Pa.C.S. § 9623 (relating to right to redeem
collateral).
(2) Property is deemed to be returned in a manner in
compliance with this chapter and 13 Pa.C.S. § 9623 by
delivery to one of the following sites designated by the
buyer:
(i) The county in this Commonwealth or within a
comparable governmental unit outside this Commonwealth
where repossession occurred.
(ii) The county in this Commonwealth where the buyer
resides.
(iii) The county in this Commonwealth where the
vehicle was purchased under the contract.
(3) Upon receipt of the funds necessary to redeem the
motor vehicle as provided in subsection (b), the holder shall
return the repossessed motor vehicle as soon as is reasonably
possible, but not later than ten business days from the
receipt of the funds.
§ 6260. Sale of motor vehicle after repossession.
(a) Forfeiture.--If the repossessed motor vehicle subject to
an installment sale contract is not redeemed by the buyer either
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by termination or reinstatement of the contract within the 15-
day notice of redemption period, the buyer shall forfeit all
claim to the motor vehicle and collateral security.
(b) Deficiency.--If the buyer does not redeem the
repossessed motor vehicle within the 15-day notice of redemption
period, the installment seller or holder may not bring an action
or proceeding against the buyer for a deficiency under section
6261 (relating to deficiency judgment), unless there has been a
public or private sale of the repossessed motor vehicle and
collateral security.
(c) Motor vehicle title.--At the sale of a repossessed motor
vehicle to a purchaser, the installment seller or holder shall
provide to the purchaser the title to the vehicle and all
necessary documents to effect the transfer of the motor vehicle.
§ 6261. Deficiency judgment.
(a) General rule.--If the proceeds of a resale under section
6260 (relating to sale of motor vehicle after repossession) are
not sufficient to defray the expenses regarding the repossessed
motor vehicle, including the costs under section 6256 (relating
to buyer's liability for costs), the net balance due on the
installment sale contract and the amount of accrued late charges
authorized by this chapter, the installment seller or holder may
recover the deficiency from the buyer or from any person who has
succeeded to the obligations of the buyer.
(b) Reasonable value.--
(1) The reasonable value of the motor vehicle at the
time of resale shall be determined in an action or a
proceeding brought by:
(i) the installment seller or holder to recover the
deficiency; or
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(ii) the buyer.
(2) The resale price of the motor vehicle is prima
facie, but not conclusive, evidence of the reasonable value
of the motor vehicle.
(3) The determined reasonable value or the resale price
of the motor vehicle, whichever is higher, shall be credited
against the buyer's indebtedness.
(c) Reasonable costs.--In an action or a proceeding for a
deficiency, the buyer may have the reasonableness of the costs
incurred determined under section 6256.
(d) Deficiency notice.--Within 30 days after the sale of a
repossessed motor vehicle, the installment seller or holder
shall deliver in person or send by registered or certified mail
to the last known address of the buyer a deficiency notice
containing the following:
(1) The sale price of the repossessed motor vehicle.
(2) The itemized costs associated with the repossession
and sale of the repossessed motor vehicle.
(3) The amount of the deficiency owed by the buyer.
(e) Nonapplicability.--Subsections (b)(1)(ii) and (d) shall
not apply to a deficiency on a resale that was held prior to the
effective date of this section.
§ 6262. Procedures for manufactured homes.
(a) Notice.--
(1) A holder of an installment sale contract for a
manufactured home shall give the buyer notice under this
subsection before the holder takes any of the following
actions:
(i) Accelerates the maturity of the installment sale
contract for the manufactured home.
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(ii) Commences a legal action to recover under the
contract.
(iii) Takes possession of any collateral of the
buyer for the obligation.
(2) Notice of the intention to take an action under
paragraph (1) shall be in writing and:
(i) Sent to the buyer at least 30 days in advance of
the action by registered or certified mail at the address
where the manufactured home is located.
(ii) Clearly and conspicuously state the following:
(A) The particular obligation or security
interest.
(B) The nature of the default claimed.
(C) The right of the buyer to cure the default
as provided in this section and exactly what
performance, including the sum of money, that must be
tendered to cure the default.
(D) The right of the buyer to cure the default
at any time before title to the manufactured home is
lawfully transferred from the buyer, which shall be
at least 45 days after receipt of the notice.
(E) The method by which the buyer's ownership or
possession of the manufactured home may be
terminated.
(3) Notice under this subsection shall not be required
if the buyer has abandoned or voluntarily surrendered the
property that is the subject of the contract.
(b) Cure of default.--
(1) Notwithstanding any other provision of law, the
buyer of a manufactured home under an installment sale
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contract or another person on the buyer's behalf may cure the
buyer's default and prevent the sale or other disposition of
the manufactured home and avoid acceleration:
(i) After the notice under subsection (a) has been
given.
(ii) At any time before title to the manufactured
home is lawfully transferred from the buyer, which shall
be at least 45 days after the buyer's receipt of the
notice.
(iii) Not more than three times in a calendar year.
(iv) By tendering the amount or performance
specified in this section.
(2) To cure a default under this subsection, the buyer
shall take the following actions:
(i) Pay by cash, cashier's check or certified check
all sums which would have been due at the time of
payment, in the absence of default or exercise of an
acceleration clause.
(ii) Perform any other obligation which the buyer
would have been bound to perform, in the absence of
default or exercise of an acceleration clause.
(iii) Pay reasonable fees allowed under subsection
(d) and reasonable costs of proceeding to commence legal
action as specified in writing by the holder and actually
incurred to the date of payment.
(iv) Pay a reasonable late penalty, if provided for
in the contract.
(v) Pay the costs that are reasonable and actually
incurred by the holder for detaching and transporting the
manufactured home to the site of the sale.
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(3) The cure of a default under this subsection shall
restore the buyer to the same position as if the default had
not occurred.
(c) Prepayment.--An obligation under an installment sale
contract for a manufactured home may be prepaid without penalty
or other charge for prepayment at any time before the end of the
period of the loan.
(d) Attorney fees.--A holder of an installment sale contract
for a manufactured home may not contract for or receive attorney
fees from the buyer except as follows:
(1) Upon commencement of legal action regarding the
contract, attorney fees that are reasonable and actually
incurred by the holder may be charged to the buyer.
(2) Prior to commencement of legal action regarding the
contract, attorney fees may be charged if they are:
(i) Reasonable and actually incurred.
(ii) Not in excess of $150.
(iii) Incurred after the 30-day notice period under
subsection (a).
(e) Waiver prohibited.--Notwithstanding any other provision
of law, a person may not waive the provisions of this section by
an oral or written agreement.
SUBCHAPTER F
PENALTIES AND LIABILITY
Sec.
6271. Operating without license.
6272. Violation of chapter provisions.
6273. Use of unlicensed collector-repossessor.
6274. Civil penalty by department.
6275. Liability of sales finance company.
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§ 6271. Operating without license.
(a) Prohibition; penalty.--An entity or individual under
subsection (b) engaging in business in this Commonwealth as an
installment seller, sales finance company or collector-
repossessor without having obtained a license under this chapter
is guilty of a violation of this chapter and, upon conviction,
shall be sentenced at the discretion of the court to either or
both of the following:
(1) Pay a fine of not less than $2,000 nor more than
$10,000.
(2) Imprisonment for not more than three years.
(b) Applicability.--Subsection (a) applies to the following:
(1) A person, partnership, association, business
corporation, financial institution, nonprofit corporation,
common law trust, joint stock company or any other group of
individuals, however organized.
(2) An owner, partner, member, officer, director,
trustee, employee, agent, broker or representative of an
entity under paragraph (1).
§ 6272. Violation of chapter provisions.
A licensee or an owner, partner, member, officer, director,
trustee, employee, agent, broker or representative of the
licensee who violates a provision of this chapter or directs a
violation of this chapter shall be guilty of a violation of this
chapter, and upon conviction shall be sentenced at the
discretion of the court to the following:
(1) Pay a fine of not more than $2,000 for the first
offense.
(2) For each subsequent offense, to either or both of
the following:
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(i) Pay a fine of not more than $2,000.
(ii) Imprisonment for not more than one year.
§ 6273. Use of unlicensed collector-repossessor.
A licensed seller or sales finance company acting as holder
of a motor vehicle installment sale contract who hires,
authorizes or permits an unlicensed collector-repossessor, as
defined in this chapter, to collect payments on the contract or
repossess a motor vehicle sold under the contract within this
Commonwealth shall be guilty of a violation of this chapter and,
upon conviction, shall be sentenced at the discretion of the
court to the following:
(1) Pay a fine of not more than $2,000 for the first
offense.
(2) For each subsequent offense, to either or both of
the following:
(i) Pay a fine of not more than $2,000.
(ii) Imprisonment for not more than one year.
§ 6274. Civil penalty by department.
A person required to be licensed under this chapter that
violates this chapter, directs a violation of this chapter or
engages in an activity for which a license could be suspended or
revoked under section 6218 (relating to revocation or suspension
of license) shall be subject to a civil penalty levied by the
department of not more than $2,000 for each offense.
§ 6275. Liability of sales finance company.
(a) Exemption from liability.--A sales finance company
licensed under this chapter and engaged in the purchase, sale,
assignment, securitization or servicing of installment sale
contracts may not be held liable under this chapter for either
of the following:
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(1) Excessive markups of charges by installment sellers.
(2) A failure to disclose under section 6221(e)
(relating to requirements).
(b) Federal status preserved.--This section does not affect
the liability of a sales finance company that is a holder under
the Federal Trade Commission Act (15 U.S.C. § 41 et seq.).
CHAPTER 63
GOODS AND SERVICES INSTALLMENT SALES
Subchapter
A. General Provisions
B. Closed-End Credit Agreements
C. Open-End Credit Agreements
D. Costs and Charges
E. Enforcement and Penalties
SUBCHAPTER A
GENERAL PROVISIONS
Sec.
6301. Scope of chapter.
6302. Definitions.
6303. Waiver.
6304. Applicability.
6305. Prohibited activities and provisions.
6306. Assignment.
6307. Venue.
6308. Attorney fees and costs.
6309. Repossession; acceleration; right to cure.
6310. Lien.
6311. Validity.
6312. Discharge of obligation.
6313. Prepayment of obligation.
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6314. Acknowledgment of payment in full.
§ 6301. Scope of chapter.
This chapter relates to goods and services installment sales.
§ 6302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Actuarial method." The method of allocating payments made
on a debt between the amount financed and the finance charge at
the interest rate stated in the closed-end credit agreement, as
defined in Regulation Z, adopted under the Truth in Lending Act
(Public Law 90-321, 15 U.S.C. § 1601 et seq.).
"Buyer." A person who buys goods or obtains services from a
seller in a sale, if the acquisition is not principally for the
purpose of resale.
"Closed-end credit agreement." Either of the following:
(1) A contract for a sale between a buyer and seller in
which the buyer promises to pay in installments the
outstanding balance incurred in the sale, whether or not the
contract contains a security interest, and which contains
either of the following:
(i) A finance charge, which is computed and added to
the unpaid balance.
(ii) A provision specifying that if the buyer had
not contracted to pay in installments, the buyer could
have received the goods or services at a lesser price or
additional or higher quality goods or services at no
added cost.
(2) A contract for a sale between a buyer and seller
that includes a security agreement or a contract for the
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bailment or leasing of goods in which both of the following
occur:
(i) The consideration that the bailee or lessee
contracts to pay as compensation for the use of the goods
is a sum substantially equivalent to or in excess of
their value and is an obligation for the term of the
lease that is not subject to termination by the bailee or
lessee.
(ii) The bailee or lessee agrees to become or has
the option of becoming the owner of the goods for no or
nominal additional consideration upon full compliance
with the terms of the contract.
"Finance charge."
(1) The amount, regardless of how expressed, that a
buyer contracts to pay or pays for the privilege of
purchasing goods or services to be paid in installments.
(2) Includes all charges incident to investigating and
making a closed-end credit agreement or an open-end credit
agreement and for the extension of the credit under that
agreement.
(3) Excludes the following:
(i) Amounts charged for insurance premiums under
section 6342 (relating to insurance).
(ii) Late fees under section 6343 (relating to late
fees).
(iii) The costs of collection under section 6344
(relating to costs of collection).
(iv) Costs from nonaffiliated entities under section
6346 (relating to costs from nonaffiliated entity).
(v) Extension and deferment charges under section
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6347 (relating to extension and deferment).
(vi) Attorney fees.
(vii) Court costs.
(viii) Official fees.
"Financing agency." A person, including a financial
institution, engaged in this Commonwealth in whole or in part in
the business of purchasing closed-end credit agreements or open-
end credit agreements from at least one seller.
"Goods."
(1) Personal property bought primarily for personal,
family or household use.
(2) The term includes the following:
(i) Certificates, coupons or gift cards exchangeable
for goods.
(ii) Electronic media items.
(iii) Items purchased through the Internet.
(3) The term excludes the following:
(i) Goods covered under the act of August 14, 1963
(P.L.1082, No.464), known as the Home Improvement Finance
Act.
(ii) A motor vehicle covered under Chapter 62
(relating to motor vehicle sales finance).
(iii) A security covered under the act of December
5, 1972 (P.L.1280, No.284), known as the Pennsylvania
Securities Act of 1972.
"Holder."
(1) Either of the following:
(i) A seller who acquires a closed-end credit
agreement or an open-end credit agreement that is
executed, incurred or entered into by a buyer.
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(ii) A financing agency or other assignee that
purchases the agreement under subparagraph (i).
(2) Excludes a pledgee or holder of a security interest
in an aggregate number of agreements to secure a bona fide
loan on them.
"Official fees." The fees required by law and actually to be
paid to the appropriate public officer to perfect a lien or
other security interest that is retained or taken by a seller
under a closed-end credit agreement or an open-end credit
agreement.
"Open-end credit agreement." A contract:
(1) in which a buyer promises to pay in installments to
a seller or financing agency the outstanding balance incurred
in a sale, whether or not the seller retains a security
interest in the goods sold; and
(2) that provides for a finance charge expressed as a
percent of the periodic balances to accrue thereafter, if the
charge is not capitalized or stated as a dollar amount in the
contract.
"Purchase price." The price of goods sold or services
furnished, which may include applicable taxes, as specified in a
closed-end credit agreement or an open-end credit agreement.
"Sale." The sale of goods or furnishing of services by a
seller to a buyer for a time sale price payable in installments.
"Seller." A person engaged in the business of selling goods
or furnishing services to a buyer.
"Service contract." A written contract, optional on the part
of a buyer, to perform over a fixed period of time or for a
specified duration services regarding the maintenance or repair
of goods.
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"Services."
(1) Work, labor and services for other than a commercial
or business use.
(2) The term includes the following:
(i) Services furnished in connection with the
purchase or repair of goods or the repair of motor
vehicles.
(ii) A service contract.
(iii) Services purchased through the Internet.
(3) The term excludes the following:
(i) Services covered under the act of August 14,
1963 (P.L.1082, No.464), known as the Home Improvement
Finance Act.
(ii) A service contract or warranty covered under
Chapter 62 (relating to motor vehicle sales finance).
(iii) Services for which the tariffs, rates,
charges, costs or expenses, including in each instance
the time sale price, are required by law to be filed with
or approved by any of the following:
(A) The Commonwealth.
(B) The Federal Government.
(C) An official department, commission or agency
of the Commonwealth or the United States.
"Time balance." The total of the unpaid balance and the
amount of the finance charge.
"Time sale price." The total of the purchase price and the
amounts included for insurance, official fees and finance
charge.
"Unpaid balance." The purchase price and the amounts
included for insurance and official fees, less the amount of a
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buyer's down payment in money or goods.
"Warranty."
(1) Either of the following, which becomes part of the
basis of the bargain between a buyer and seller for purposes
other than resale:
(i) A written affirmation of fact or written promise
made in connection with the sale of goods by a seller or
manufacturer to a buyer that relates to the nature of the
material or workmanship and affirms or promises that the
material or workmanship is free of defects or will meet a
specified level of performance over a specified period of
time.
(ii) Any undertaking in writing in connection with
the sale of goods by a seller or manufacturer to refund,
repair, replace or take other remedial action with
respect to the goods if the goods fail to meet the
specifications set forth in the undertaking.
(2) Excludes a service contract and an extended warranty
with the characteristics of a service contract.
§ 6303. Waiver.
A buyer's waiver of the provisions of this chapter, including
any purported waiver effected by a contractual choice of the law
of another jurisdiction contained in a closed-end credit
agreement or an open-end credit agreement, shall be deemed
contrary to public policy and is void and unenforceable.
§ 6304. Applicability.
(a) Agreements.--A closed-end credit agreement and an open-
end credit agreement are deemed to be made in this Commonwealth
and subject to the provisions of this chapter if either of the
following occurs:
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(1) The seller offers or agrees in this Commonwealth to
sell to a resident buyer of this Commonwealth.
(2) A resident buyer of this Commonwealth accepts or
makes the offer in this Commonwealth to buy, regardless of
the situs specified in the agreement.
(b) Offer to sell.--A verbal or written solicitation or
communication to sell that originates outside this Commonwealth
and is forwarded to and received in this Commonwealth by a
resident buyer of this Commonwealth shall be deemed an offer or
agreement to sell in this Commonwealth and subject to the
provisions of this chapter.
(c) Offer to buy.--A verbal or written solicitation or
communication to buy that originates within this Commonwealth
from a resident buyer of this Commonwealth and is forwarded to
and received by a seller outside this Commonwealth shall be
deemed an acceptance or offer to buy in this Commonwealth and
subject to the provisions of this chapter.
(d) Subsequent goods and services.--Goods or services that
subsequently result from a solicitation or communication under
subsection (b) or (c) are subject to the provisions of this
chapter.
(e) Exclusivity.--Notwithstanding any provision of law to
the contrary, this chapter shall exclusively govern and regulate
the terms and conditions of all extensions of credit, except
cash advances, for the purchase of goods and services within
this Commonwealth.
§ 6305. Prohibited activities and provisions.
(a) Activities.--In attempting to collect a buyer's
obligation, a seller or holder shall comply with the act of
March 28, 2000 (P.L.23, No.7), known as the Fair Credit
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Extension Uniformity Act.
(b) Provisions.--A closed-end credit agreement, an open-end
credit agreement or other agreement may not contain a provision
by which any of the following may occur:
(1) Except as provided in section 6306 (relating to
assignment), the buyer agrees not to assert a claim or
defense arising from the sale against a seller or an
assignee.
(2) In the absence of the buyer's default in the
performance of an obligation, the holder may accelerate the
maturity of all or part of the amount owed.
(3) The seller or holder of the agreement, or a person
acting on behalf of the seller or holder, is given authority
to enter the buyer's premises unlawfully or commit a breach
of the peace in the repossession of goods.
(4) The buyer waives a right of action against the
seller or holder of the agreement, or a person acting on
behalf of the seller or holder, for an illegal act committed
in the collection of payments under the agreement or the
repossession of goods.
(5) The buyer executes a power of attorney appointing
the seller or holder of the agreement, or a person acting on
behalf of the seller or holder, as the buyer's agent in the
collection of payments under the agreement or the
repossession of goods.
(6) The buyer relieves the seller from liability for
legal remedies that the buyer may have against the seller
under the agreement or a separate instrument executed in
connection with the agreement.
(7) The buyer agrees to the payment of a charge by
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reason of the exercise of the right to rescind or avoid the
agreement.
(8) The seller or holder of the agreement is given the
right to commence an action on the agreement under the
provisions of this chapter in a county other than the county
where any of the following occurred:
(i) The buyer signed the agreement.
(ii) The buyer resides at the commencement of the
action.
(iii) The buyer resided when the agreement was
entered into.
(iv) The goods purchased under the agreement have
been so affixed to real property as to become a part of
the real property.
(9) An assignment of wages is given.
(10) The seller or holder of the agreement, or a person
acting on behalf of the seller or holder, is given authority
to execute upon a judgment by confession.
(11) The seller or holder of the agreement, or a person
acting on behalf of the seller or holder, is given authority
to take a mortgage or other security against residential real
estate of the buyer or another obligee to the agreement.
§ 6306. Assignment.
Except as provided in section 6352 (relating to
noncompliance; costs and charges), a right of action or defense
arising from a sale that a buyer has against a seller is not
eliminated by assignment of the buyer's closed-end credit
agreement or open-end credit agreement to a third party,
regardless of whether the third party acquires the agreement in
good faith and for value.
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§ 6307. Venue.
An action on a closed-end credit agreement or an open-end
credit agreement shall be commenced in a county where any of the
following occurred:
(1) The buyer signed the agreement.
(2) The buyer resides at the commencement of the action.
(3) The buyer resided when the agreement was entered
into.
(4) The goods purchased under the agreement have been so
affixed to real property as to become a part of the real
property.
§ 6308. Attorney fees and costs.
(a) Award.--Reasonable attorney fees and costs shall be
awarded to the prevailing party in an action on a closed-end
credit agreement or an open-end credit agreement, regardless of
whether the action is instituted by the seller, holder or buyer.
(b) Agreement.--A seller may provide for the payment of
attorney fees and costs under subsection (a) in an agreement
signed by the buyer, if a copy of the agreement is given or
furnished to the buyer.
(c) Definition.--For purposes of this section, a defendant
is deemed to be a prevailing party if both of the following
occur:
(1) The defendant:
(i) Alleges in its answer that it tendered to the
plaintiff the full amount to which the plaintiff was
entitled.
(ii) Deposits the amount with the court.
(2) The allegation in paragraph (1)(i) is found to be
true.
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§ 6309. Repossession; acceleration; right to cure.
(a) Rights of holder.--If a buyer defaults in the
performance of an obligation under a closed-end credit agreement
or an open-end credit agreement, the holder, pursuant to the
rights granted under the agreement:
(1) May proceed to recover judgment for the balance due
or retake the goods.
(2) Shall comply with and be limited by the requirements
of 13 Pa.C.S. (relating to commercial code).
(b) Prohibited actions.--Unless the buyer is in default and
the seller or holder provides the buyer with the notice under
subsection (c), a seller or holder may not:
(1) accelerate the maturity of the agreement; or
(2) commence legal action or repossess without legal
process.
(c) Notice.--
(1) Notice under this section shall be:
(i) sent by certified mail to the buyer's last known
address; or
(ii) delivered personally to the residence of the
buyer.
(2) The notice shall inform the buyer of all the
following:
(i) The right to cure the default within 21 days of
the date of receipt of the notice upon the payment of all
the following:
(A) The amount in default.
(B) Late fees under section 6343 (relating to
late fees).
(C) Extension and deferment charges under
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section 6347 (relating to extension and deferment).
(D) Actual repossession costs.
(ii) The name, address and telephone number of the
seller or holder.
(iii) The total amount due, which is the sum of the
items in subparagraph (i).
(iv) The exact date by which the amount due must be
paid.
(v) The name, address and telephone number of the
person to whom payment must be made.
(vi) Other performance necessary to cure a default
arising from other than nonpayment of the obligation.
(3) The seller or holder is not required to provide the
notice under this subsection more than once in any 12-month
period.
(d) Rights of buyer; curing default.--
(1) The buyer shall have the rights specified in the
notice under subsection (c).
(2) The act of curing a default restores to the buyer
the rights under the agreement as though no default had
occurred.
§ 6310. Lien.
A contract, other than for services, may not provide for a
lien on goods that are fully paid for or have not been sold by
the seller.
§ 6311. Validity.
A provision in a closed-end credit agreement or an open-end
credit agreement that is prohibited by this chapter is void but
does not otherwise affect the validity of the agreement.
§ 6312. Discharge of obligation.
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Unless a buyer has notice of the actual or intended
assignment of a closed-end credit agreement or an open-end
credit agreement, payment made by the buyer to the last known
holder of the agreement shall, to the extent of the payment,
discharge the buyer's obligation.
§ 6313. Prepayment of obligation.
(a) Right to prepay.--Notwithstanding the provisions of a
closed-end credit agreement or an open-end credit agreement, a
buyer may prepay without additional charge at any time all or
part of the time balance under the agreement.
(b) Refund credit.--
(1) Pursuant to a closed-end credit agreement and
subject to this chapter, the seller or holder may accelerate
the balance due on the agreement but shall provide a refund
credit calculated as of the date of the acceleration if:
(i) the finance charges had been computed and added
to the unpaid balance at the time the agreement was
entered into; and
(ii) the entire time balance under the agreement is
prepaid prior to maturity.
(2) The amount of the refund credit shall be computed by
the actuarial method.
(3) If the amount of the refund credit is less than $1,
a refund does not need to be made.
§ 6314. Acknowledgment of payment in full.
Upon a buyer's request and after the payment of all sums for
which the buyer is obligated under a closed-end credit agreement
or an open-end credit agreement, the holder shall deliver or
mail to the buyer at the buyer's last known address an
instrument that:
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(1) Acknowledges that the obligation of the buyer under
the agreement has been paid in full.
(2) Releases all security in the goods under the
agreement.
SUBCHAPTER B
CLOSED-END CREDIT AGREEMENTS
Sec.
6321. General rules.
6322. Contents.
6323. Copy of agreement.
6324. Agreement resulting from telephone or mail
communications.
6325. Purchase money loan; notice.
6326. Statement to buyer.
6327. Refinancing.
6328. New payment schedule.
6329. Add-on sales.
§ 6321. General rules.
(a) Entire agreement.--Except as provided in section 6329(c)
(relating to add-on sales), a closed-end credit agreement shall
contain the entire agreement of the parties regarding the costs
and terms of payment for the goods and services, including a
promissory note or other evidence of indebtedness between the
parties relating to the transaction.
(b) Signature.--A seller may not obtain the signature of the
buyer on the agreement if the agreement contains blank spaces to
be filled in after it has been signed.
(c) Installments.--A closed-end credit agreement may provide
for unequal or irregular installments.
(d) Incorporation by reference.--A holder may, in a buyer's
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subsequent closed-end credit agreement, incorporate by reference
the buyer's previous closed-end credit agreement and a
description of the collateral for the items purchased under the
previous agreement.
§ 6322. Contents.
Except as provided in section 6329 (relating to add-on
sales), a closed-end credit agreement shall contain all the
following:
(1) One of the following headings at the top of the
agreement or directly above the space reserved for the
signature of the buyer:
(i) "Security Agreement" if the seller retains a
security interest in the goods as security for the goods
or services purchased.
(ii) "Lien Contract" if the seller obtains a lien on
other goods or nonresidential real estate as security for
the goods or services purchased.
(iii) "Closed-End Credit Agreement" if the seller
does not obtain security for the goods or services
purchased.
(2) The names of the seller and buyer.
(3) The place of business of the seller.
(4) The residence or place of business of the buyer as
specified by the buyer.
(5) A description of the goods or services sufficient to
identify them. Services or multiple items of goods may be
described in general terms but in detail sufficient to
identify them, in a separate writing.
(6) The purchase price of the goods and services that
are the subject matter of the sale.
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(7) The amount of the buyer's down payment, including
the following:
(i) An itemization of the amount paid in money and
goods.
(ii) A brief description of traded-in goods.
(8) The difference between the purchase price under
paragraph (6) and the amount under paragraph (7).
(9) The amount included for insurance, including the
specific coverage and cost.
(10) The amount of official fees.
(11) The unpaid balance, which is the sum of the amounts
under paragraphs (8), (9) and (10).
(12) The amount of the finance charge.
(13) The time balance, which is the sum of the unpaid
balance under paragraph (11) and the amount under paragraph
(12), and the following:
(i) The number of installments required.
(ii) The amount of each installment expressed in
dollars.
(iii) The due date or period for each installment.
(14) The time sale price.
(15) The following notice provision:
NOTICE TO THE BUYER
Do not sign this agreement before you read it or if it
contains any blank spaces. You are entitled to a
completely filled-in copy of this agreement. You have the
right to pay off in advance the full amount due. Under
certain conditions, you may obtain a partial refund of
the finance charge.
(16) The following notice provision:
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NOTICE
A holder of this agreement is subject to all the claims
and defenses that the buyer could assert against the
seller of goods or services obtained by this agreement or
with the proceeds of this agreement. Recovery under this
agreement by the buyer may not exceed the amount paid by
the buyer under the agreement.
(17) A statement that the seller may collect from the
buyer late fees, costs of collection, costs from
nonaffiliated entities and charges for deferment and
extension as provided for in this chapter.
§ 6323. Copy of agreement.
(a) Delivery of copy.--Except as provided in section 6324(b)
(relating to agreement resulting from telephone or mail
communications), a seller shall provide a legible and complete
copy of a closed-end credit agreement to a buyer when the buyer
executes the agreement.
(b) Obligation of buyer.--Until the seller completes the
obligation under subsection (a), the buyer is obligated to pay
only the purchase price under the agreement.
(c) Acknowledgment.--
(1) The seller shall present an acknowledgment to the
buyer specifying that the buyer has received a copy of the
agreement.
(2) The acknowledgment may be a separate document or
contained in the agreement.
(3) If the acknowledgment is contained in the agreement,
it shall appear directly above the space reserved for the
buyer's signature.
(4) The buyer's written acknowledgment of delivery of a
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copy of the agreement in conformity with this subsection
shall be a rebuttable presumption of delivery and compliance
with this subsection in an action or proceeding by or against
an assignee of the agreement without knowledge to the
contrary when the agreement is purchased.
§ 6324. Agreement resulting from telephone or mail
communications.
(a) General rule.--A closed-end credit agreement that is
negotiated and entered into by a buyer and seller by telephone
or mail is permitted under this subchapter and subject to this
section if:
(1) the seller did not personally solicit the sale; and
(2) a catalog or other printed solicitation that is
generally available to the public clearly sets forth the
purchase price, time sale price and other terms regarding the
sale of the goods or services.
(b) Applicability.--For a sale under this section, section
6323(a) (relating to copy of agreement) does not apply.
(c) Seller's completion of agreement.--If a seller under
this section receives a closed-end credit agreement from a buyer
and the agreement contains blank spaces, the seller may insert
in the appropriate blank spaces the purchase price, time sale
price and other terms regarding the sale of the goods or
services, as set forth in the seller's current catalog or other
printed solicitation.
(d) Copy of agreement or statement.--Prior to the due date
of the first installment under the agreement, the seller shall
furnish to the buyer either a legible and complete copy of the
agreement or a written statement of the items inserted in the
blank spaces described in subsection (c).
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§ 6325. Purchase money loan; notice.
(a) General rule.--Unless an instrument that evidences or
embodies a debt arising from a purchase money loan contains the
notice under subsection (b):
(1) a purchase money lender may not take or receive the
instrument; and
(2) a seller may not accept the proceeds of the purchase
money loan as full or partial payment for the sale.
(b) Notice.--An instrument under subsection (a) shall
contain the following notice:
NOTICE
A holder of this agreement is subject to all the claims and
defenses that the buyer could assert against the seller of
goods or services obtained with the proceeds of this
agreement. Recovery under this agreement by the buyer may not
exceed the amount paid by the buyer under the agreement.
(c) Definitions.--As used in this section the following
words and phrases shall have the meanings given to them in this
subsection:
"Purchase money lender." Either a seller or financing agency
making or extending a purchase money loan.
"Purchase money loan." An advance that is received by a
buyer in return for a finance charge or interest that is applied
to a purchase of goods or services from a seller who is
affiliated, by common control or business arrangement, with the
person extending the credit to the buyer.
§ 6326. Statement to buyer.
(a) Request; contents.--At any time after the execution of a
closed-end credit agreement and within one year after the last
payment is made under the agreement, the holder of the agreement
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shall upon the good faith written request of the buyer promptly
give or forward to the buyer a detailed written statement that
accurately states the total unpaid amount under the agreement.
(b) Copies.--
(1) The buyer shall be furnished with one statement
under this section each year without charge.
(2) The holder shall upon request furnish the buyer a
duplicate copy of the statement upon payment of a reasonable
fee not to exceed the cost of production.
(c) Applicability.--This section does not apply to a
transaction that, instead of periodic statements of account, the
buyer is provided with a passbook or payment book in which
payments, credits, charges and the unpaid balance are entered.
§ 6327. Refinancing.
(a) General rule.--Upon agreement in writing with the buyer,
the holder of a closed-end credit agreement may refinance the
payment of the unpaid time balance of the agreement by providing
for a new schedule of installment payments.
(b) Charges.--
(1) The holder may contract for and collect the payment
of a refinance charge by the buyer.
(2) A refinance charge shall be based on the amount
refinanced and include the following:
(i) The additional cost of insurance and official
fees incident to the refinancing.
(ii) The deduction of a refund credit in an amount
equal to that to which the buyer would have been entitled
under section 6313 (relating to prepayment of obligation)
if the buyer had prepaid in full the obligations under
the agreement.
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(3) A refinance charge may not exceed the rate of
finance charges under section 6345 (relating to finance
charges).
(4) Subject to section 6342 (relating to insurance), an
agreement may provide for payment of the additional cost of
or premiums for continuing insurance coverage under the
contract until the maturity of the contract.
(c) Contents of agreement.--The refinancing agreement shall
set forth all the following:
(1) The amount of the unpaid time balance to be
refinanced.
(2) The amount of a refund credit.
(3) The amount to be refinanced after the deduction of
the refund credit.
(4) The amount of the finance charge under the
refinancing agreement.
(5) The additional cost of insurance and official fees
to the buyer.
(6) The new unpaid time balance.
(7) The new schedule of installment payments.
(d) Consolidation of contracts.--If there is a consolidation
of two or more agreements, the provisions of section 6329(a) and
(b) (relating to add-on sales) apply.
§ 6328. New payment schedule.
(a) Right to new payment schedule.--If a closed-end credit
agreement provides for the payment of an installment that is
more than double the amount of the average of the preceding
installments, the buyer upon default of this installment shall
have an absolute right to obtain a new payment schedule.
(b) Payments.--Unless agreed to by the buyer, the periodic
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payments under the new schedule may not be greater than the
average of the preceding installments.
§ 6329. Add-on sales.
(a) Add-on provisions.--A closed-end credit agreement that
includes an add-on sales provision shall comply with the
requirements of this chapter and may contain the following
provisions:
(1) The seller may add subsequent purchases made by the
buyer to the agreement.
(2) The total price of the goods or services covered by
the agreement shall be increased by the price of the
additional goods or services.
(3) The seller may increase finance charges and
installment payments proportionately.
(4) The terms and conditions of the agreement shall
apply equally to the additional goods or services.
(5) The goods purchased under the previous agreement
shall be security for the goods purchased under the
subsequent agreement but only until the time sale price under
the previous agreement is fully paid.
(b) Allocation.--
(1) When a subsequent purchase is made, the entire
amount of all previously made payments is deemed to have been
applied toward the payment of the previous time sale price.
(2) A payment received after a subsequent purchase is
made is deemed to be allocated to all the various time sale
prices in the same proportion or ratio as the original
purchase prices of the various purchases bear to one another.
(3) If the amount of each installment payment is
increased in connection with the subsequent purchase, the
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subsequent payments at the seller's election may be deemed to
be allocated as follows:
(i) An amount equal to the original installment
payment, to the previous time sale price.
(ii) An amount equal to the increase, to the
subsequent time sale price.
(4) The amount of an initial or down payment on a
subsequent purchase is deemed to be allocated in its entirety
to the subsequent purchase.
(c) New agreement.--When a subsequent purchase is made, the
seller shall deliver to the buyer prior to the due date of the
first installment a new agreement that sets forth all the
following:
(1) The information under section 6322(1), (2), (3),
(4), (5), (6), (7), (8), (9), (10), (11) and (12) (relating
to contents) as it relates to the subsequent purchase.
(2) The unpaid time balance of the prior agreement with
the seller.
(3) The new unpaid balance, which is the sum of the
amount under paragraph (2) and the amount described in
section 6322(11) for the subsequent purchase.
(4) The consolidated time balance, which is the sum of
the unpaid balance under paragraph (3) and the amount of the
finance charge payable by the buyer to the seller, including
the following:
(i) The number of installments required.
(ii) The amount of each installment expressed in
dollars.
(iii) The due date or period for each installment.
(5) A statement that the seller is adding the subsequent
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purchase to the buyer's existing agreement in accordance with
the provisions of that agreement.
SUBCHAPTER C
OPEN-END CREDIT AGREEMENTS
Sec.
6331. Establishment.
6332. Requirements.
6333. Applicability and effect of subchapter.
§ 6331. Establishment.
(a) Seller.--A seller may enter into an open-end credit
agreement upon the request of a buyer or prospective buyer.
(b) Financing agency.--Subject to the other provisions of
this chapter, a financing agency may enter into an open-end
credit agreement on behalf of a seller from whom the financing
agency may, with the buyer's consent, purchase or acquire the
buyer's indebtedness, to be paid according to the agreement.
§ 6332. Requirements.
(a) Signature.--A seller may not obtain the signature of a
buyer on an application for an open-end credit agreement if it
contains blank spaces to be filled in after it has been signed.
(b) Separate agreement unnecessary.--A buyer does not need
to sign a separate account agreement when a new purchase is made
under an existing agreement.
(c) Heading.--The following heading shall appear at the top
of the agreement or directly above the space reserved for the
signature of the buyer:
(1) "Security Agreement" if the seller retains a
security interest in the goods as security for the goods or
services purchased.
(2) "Lien Contract" if the seller obtains a lien on
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other goods or nonresidential real estate as security for the
goods or services purchased.
(3) "Open-End Credit Agreement" if the seller does not
obtain security for the goods or services purchased.
(d) Entire agreement.--The written agreement shall contain
the entire agreement of the parties regarding the costs and
terms of payment for the goods and services.
§ 6333. Applicability and effect of subchapter.
(a) Security interest.--This subchapter does not prohibit
the execution of an agreement between a buyer and seller whereby
the seller retains a security interest in goods sold to the
buyer until full payment has been made.
(b) Allocation.--Section 6329(b) (relating to add-on sales)
governs goods sold under an agreement under subsection (a).
(c) Notes; third party rights.--An open-end credit agreement
may not require or entail the execution of a note by the buyer
that when separately negotiated will eliminate as to a third
party a right of action or defense that the buyer may have
against the seller.
SUBCHAPTER D
COSTS AND CHARGES
Sec.
6341. Applicability.
6342. Insurance.
6343. Late fees.
6344. Costs of collection.
6345. Finance charges.
6346. Costs from nonaffiliated entity.
6347. Extension and deferment.
6348. Interest rate after maturity.
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§ 6341. Applicability.
A seller may contract for or collect a fee, expense or charge
only if the fee, expense or charge is specifically set forth in
this chapter.
§ 6342. Insurance.
(a) Compliance with law.--The following shall comply with
the act of September 2, 1961 (P.L.1232, No.540), known as the
Model Act for the Regulation of Credit Life Insurance and Credit
Accident and Health Insurance:
(1) The seller and buyer, if:
(i) the cost of the insurance is included in the
closed-end credit agreement; and
(ii) a separate charge is made to the buyer for the
insurance.
(2) The seller or holder, if the insurance is to be
procured by the seller or holder under an open-end credit
agreement.
(b) Separate charge; agreement.--
(1) If the cost of insurance is to be separately charged
to the buyer under an open-end credit agreement, the buyer
and seller must so specify in a signed agreement.
(2) A copy of the agreement under paragraph (1) shall be
given or furnished to the buyer.
(3) The agreement shall state whether the insurance is
to be procured by the buyer, seller or holder.
§ 6343. Late fees.
(a) Closed-end credit agreement.--
(1) A closed-end credit agreement may provide for the
payment by the buyer of a late fee on each installment in
default for a period of not less than ten days in an amount
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not in excess of 5% of the installment or $10, whichever is
less.
(2) Only one late fee may be collected on an installment
regardless of the period that it remains in default.
(b) Open-end credit agreement.--A late fee may be assessed
on an open-end credit agreement regarding each minimum payment
not paid in full on the payment due date of the statement on
which the minimum payment first appears.
§ 6344. Costs of collection.
A closed-end credit agreement or an open-end credit agreement
may provide for payment of actual and reasonable costs of
collection only if any of the following occurs:
(1) If the goods are subject to a security interest, the
goods are removed from this Commonwealth without the written
permission of the holder.
(2) The buyer fails to notify the holder of a change of
residence.
(3) The buyer fails to communicate with the holder for a
period of 45 days after a default in making payments due
under the agreement.
§ 6345. Finance charges.
(a) General rule.--Pursuant to this section and the
provisions of a closed-end credit agreement or an open-end
credit agreement, a seller and holder may charge, receive and
collect a finance charge.
(b) Closed-end credit agreement.--A finance charge under a
closed-end credit agreement shall be:
(1) measured for a period between the date of the
agreement and the due date of the last installment; and
(2) calculated for the period according to the actuarial
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method or the United States Rule method, at a rate agreed to
by the buyer and the seller or holder.
(c) Open-end credit agreement.--
(1) Except as provided in paragraph (2), a finance
charge on an open-end credit agreement:
(i) shall be computed based on the outstanding
monthly balances; and
(ii) may not exceed the rate agreed to by the buyer
and the seller or holder.
(2) A minimum finance charge of $1 per month may be made
for each month, if the finance charge so computed is less
than that amount.
§ 6346. Costs from nonaffiliated entity.
A closed-end credit agreement and an open-end credit
agreement may provide for the reimbursement from a buyer of
costs for a service provided by an entity that is not otherwise
affiliated with the seller or holder if all the following
conditions exist:
(1) The buyer requests that the seller or holder provide
the service.
(2) The service is for the convenience of the buyer.
(3) The seller or holder contracts with the entity to
provide the service to the buyer or other buyers.
(4) The seller or holder actually incurs the costs of
the service provided by the entity.
(5) The costs incurred for the service are reasonable
and necessary.
(6) The reimbursement costs received from the buyer do
not exceed the costs incurred by the seller or holder.
§ 6347. Extension and deferment.
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(a) General rule.--Upon agreement with the buyer, the holder
of a closed-end credit agreement or an open-end credit agreement
may extend the scheduled due date or defer the scheduled payment
of all or part of an installment payable under the agreement.
(b) Charges.--
(1) A charge may not be made for an extension or a
deferment unless the extension or deferment agreement is in
writing and signed by the parties.
(2) Subject to paragraph (3), the holder may contract
for and collect the payment of an extension or deferment
charge by the buyer.
(3) Except as provided in paragraph (4), the charge
under paragraph (2) may not exceed an amount equal to 1.5%
per month simple interest on the full amount or part of the
installment for the extension or deferment period, which may
not exceed the period:
(i) from the date when the extended or deferred
installment would have been payable in the absence of the
extension or deferment; and
(ii) to the date when the installment is made
payable under the extension or deferment agreement.
(4) A minimum charge of $10 for the extension or
deferment period may be made if the computed extension or
deferment charge amounts to less than $10.
(5) Subject to section 6342 (relating to insurance), the
agreement may provide for payment of the additional cost of
or premiums for continuing insurance coverage under the
agreement until the end of the extension or deferment period.
§ 6348. Interest rate after maturity.
If a balance remains unpaid at the expiration of the
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scheduled maturity date of a closed-end credit agreement, the
rate of the finance charge for the period beginning at the date
of the maturity until payment in full may not exceed the rate of
the finance charge under the original agreement.
SUBCHAPTER E
ENFORCEMENT AND PENALTIES
Sec.
6351. Willful and intentional violations.
6352. Noncompliance; costs and charges.
6353. Willful violations regarding finance charges.
6354. Corrections.
6355. Unfair trade practice.
§ 6351. Willful and intentional violations.
A person who willfully and intentionally violates, or directs
or consents to the violation of, a provision of this chapter
commits a misdemeanor and shall, upon conviction, be sentenced
to pay a fine of not more than $1,000 or to imprisonment for not
more than one year, or both.
§ 6352. Noncompliance; costs and charges.
(a) Bar to recovery.--If a seller fails to comply with the
provisions of this chapter, the seller or holder who acquires a
closed-end credit agreement or an open-end credit agreement with
knowledge of the noncompliance is barred from recovery of the
following costs and charges imposed in connection with the
agreement:
(1) Refinance charges under section 6327 (relating to
refinancing).
(2) Late fees under section 6343 (relating to late
fees).
(3) Costs of collection under section 6344 (relating to
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costs of collection).
(4) Finance charges under section 6345 (relating to
finance charges).
(5) Extension and deferment charges under section 6347
(relating to extension and deferment).
(6) Interest after maturity under section 6348 (relating
to interest rate after maturity).
(b) Remedy of buyer.--The buyer shall have the right to
recover from the person under subsection (a) an amount equal to
the charges under subsection (a) that were paid by the buyer.
§ 6353. Willful violations regarding finance charges.
(a) Penalty.--If a seller or holder willfully violates a
provision of this chapter regarding the imposition, computation
or disclosure of a finance charge on a consolidated total of two
or more agreements under section 6329 (relating to add-on
sales), the buyer may recover from the seller or holder an
amount equal to three times the total of the following, which
have been actually paid by the buyer:
(1) Refinance charges under section 6327 (relating to
refinancing).
(2) Late fees under section 6343 (relating to late
fees).
(3) Costs of collection under section 6344 (relating to
costs of collection).
(4) Finance charges under section 6345 (relating to
finance charges).
(5) Extension and deferment charges under section 6347
(relating to extension and deferment).
(6) Interest after maturity under section 6348 (relating
to interest rate after maturity).
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(b) Bar to recovery.--If a violation has occurred under this
section, the seller or holder is barred from the recovery of the
costs and charges under subsection (a).
§ 6354. Corrections.
(a) General rule.--Notwithstanding the provisions of this
chapter and subject to subsection (b), a seller or holder may
correct a failure to comply with a provision of this chapter in
accordance with this section unless a willful violation has
occurred.
(b) Concurrence by buyer.--A correction that will increase
the amount owed by the buyer or the amount of a payment is not
permitted unless the buyer concurs in writing with the
correction.
(c) No liability.--If a seller or holder corrects a
violation in accordance with this section, the seller and holder
are not subject to penalty under this subchapter.
(d) Delivery.--Within 30 days of the execution of the
original closed-end credit agreement or open-end credit
agreement by the buyer, a correction may be delivered to the
buyer in the form of a corrected copy of the agreement.
(e) Credit.--An amount improperly collected from the buyer
shall be:
(1) credited against the indebtedness evidenced by the
agreement; or
(2) refunded to the buyer if the debt has already been
satisfied.
§ 6355. Unfair trade practice.
A violation of any provision of this chapter shall be deemed
to be a violation of the act of December 17, 1968 (P.L.1224, No.
387), known as the Unfair Trade Practices and Consumer
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Protection Law.
Section 3. Title 12 is amended by adding a part heading and
part analysis to read:
PART IX
MISCELLANEOUS PROVISIONS
Chapter
97. Foreign Currency
98. Assembled Industrial Plant Doctrine
Section 4. The definition of "rental-purchase agreement" in
section 6902 of Title 42 is amended to read:
§ 6902. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Rental-purchase agreement." An agreement for the use of
personal property by an individual primarily for personal,
family or household purposes for an initial period of four
months or less that is automatically renewable with each rental
payment after the initial period and that permits the lessee to
acquire ownership of the property. The term shall not be
construed to be, nor is it subject to laws governing, any of the
following:
(1) A lease for agricultural, business or commercial
purposes.
(2) A lease made to an organization.
(3) A lease of money or intangible personal property.
(4) A lease of a motor vehicle, motor home, mobile home
or manufactured housing.
(5) A home solicitation sale under section 7 of the act
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of December 17, 1968 (P.L.1224, No.387), known as the Unfair
Trade Practices and Consumer Protection Law.
(6) [A retail installment sale, retail installment
contract or retail installment account as defined in the act
of October 28, 1966 (1st Sp.Sess., P.L.55, No.7), known as
the Goods and Services Installment Sales Act.] A closed-end
credit agreement, open-end credit agreement or sale as
defined in 12 Pa.C.S. § 6302 (relating to definitions).
(7) A security interest as defined in 13 Pa.C.S. § 1201
(relating to general definitions).
Section 5. Section 6911 of Title 42 is amended to read:
§ 6911. Conflict with other law.
In the event of a conflict between this chapter and [the act
of October 28, 1966 (1st Sp.Sess., P.L.55, No.7), known as the
Goods and Services Installment Sales Act] 12 Pa.C.S. Ch. 63
(relating to goods and services installment sales), the
provisions of this chapter shall be controlling.
Section 6. The following apply:
(1) The remedies under 12 Pa.C.S. Ch. 62 for violations
of a provision of 12 Pa.C.S. Ch. 62 are not exclusive and
shall be in addition to other procedures or remedies for a
violation or conduct provided for in other law.
(2) The provisions of 12 Pa.C.S. Ch. 62 shall apply to
any license, license renewal and license application issued
or made on or after the effective date of this act.
(3) The provisions of 12 Pa.C.S. Ch. 62 do not apply to
or affect the validity of the following:
(i) A license issued prior to the effective date of
this act.
(ii) A contract that is otherwise within the purview
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of 12 Pa.C.S. Ch. 62 and was made prior to the effective
date of this act.
(4) Nothing in 12 Pa.C.S. Ch. 63 shall affect the
validity of an agreement or contractual relationship entered
into prior to April 1, 1967, except that a rate in excess of
that allowed by 12 Pa.C.S. Ch. 63 shall be reduced to the
permissible rate on or before April 1, 1967.
(5) The remedies under 12 Pa.C.S. Ch. 63 for violation
of a provision of 12 Pa.C.S. Ch. 63 are not exclusive and
shall be in addition to other procedures or remedies for a
violation or conduct provided for in other law.
Section 7. Repeals are as follows:
(1) The General Assembly declares that the repeals under
paragraphs (2) and (3) are necessary to effectuate the
addition of 12 Pa.C.S. Pt. V.
(2) The act of June 28, 1947 (P.L.1110, No.476), known
as the Motor Vehicle Sales Finance Act, is repealed.
(3) The act of October 28, 1966 (1st Sp.Sess., P.L.55,
No.7), known as the Goods and Services Installment Sales Act,
is repealed.
Section 8. This act shall take effect in one year.
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