House Introduced Bill 6446

HOUSE BILL No. 6446


     September 24, 2002, Introduced by Reps. Shulman, Koetje, Faunce, Hummel, Tabor, Van Woerkom, Gilbert, Ehardt, Stewart,
Bisbee, Palmer, Jamnick, Quarles, Woronchak, McConico, Waters, Thomas, Rivet, Lipsey, Daniels, Bishop and Cassis and referred to the
Committee on Insurance and Financial Services.


        A bill to amend 1950 (Ex Sess) PA 27, entitled

   "Motor vehicle sales finance act,"

   by amending sections 13 and 18 (MCL 492.113 and 492.118),

   section 13 as amended by 1990 PA 27 and section 18 as amended by

   1995 PA 166.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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             Sec. 13.  (1)  Every  AN installment sale contract shall

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        state the full names and addresses of all the parties to the con-

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        tract  ,  AND the date when signed by the buyer and shall contain

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        a description of the motor vehicle sold THAT IS sufficient for

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        accurate identification.

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             (2) An installment sale contract shall set forth all of the

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        following separate items in the following order:

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             (A)  1.  Cash  THE CASH price of the motor vehicle.  This

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        amount shall include any taxes,  and costs  THE CASH PRICE of


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        agreed upon accessories and installation of the accessories, THE

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        CASH PRICE OF ANY EXTENDED WARRANTY OR SERVICE CONTRACT, and A

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        documentary preparation  fees  FEE.  The documentary preparation

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         fees  FEE shall not exceed  $40.00  5% OF THE CASH PRICE OF THE

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        MOTOR VEHICLE OR $250.00, WHICHEVER IS LESS.  BEGINNING ON

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        JANUARY 1, 2005, THE ADMINISTRATOR SHALL ADJUST THE $250.00 MAXI-

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        MUM FOR THE DOCUMENTARY PREPARATION FEE DESCRIBED IN THIS SUBDI-

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        VISION EVERY 2 YEARS TO REFLECT THE CUMULATIVE PERCENTAGE CHANGE

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        IN THE CONSUMER PRICE INDEX FOR THE 2 IMMEDIATELY PRECEDING CAL-

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        ENDAR YEARS, AS DETERMINED BY THE ADMINISTRATOR.  THE ADMINISTRA-

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        TOR SHALL ROUND THE ADJUSTMENT TO THE NEAREST $100.00 INCREMENT

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        TO SET THE FEE EVERY 2 YEARS UNDER THIS SUBDIVISION, BUT SHALL

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        CARRY OVER AND USE THE ABSOLUTE VALUE TO CALCULATE THE NEXT

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        2-YEAR ADJUSTMENT.  AS USED IN THIS SUBDIVISION, "CONSUMER PRICE

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        INDEX" MEANS THE UNITED STATES CONSUMER PRICE INDEX FOR ALL URBAN

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        CONSUMERS, U.S. CITY AVERAGE, AS DEFINED AND REPORTED BY THE

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        UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS.

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             (B)  2.  Down  THE DOWN payment made by the buyer at the

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        time of or before execution of the contract, indicating whether

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        made in cash, or represented by the agreed value of a

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         "trade-in"  TRADE-IN motor vehicle  ,  or other goods, or both.

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        The amount of cash and the value of any  "trade-in"  TRADE-IN

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        shall be shown separately.  A description THAT IS SUFFICIENT FOR

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        IDENTIFICATION of  the "trade-in", if any, sufficient for

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        identification  ANY TRADE-IN shall be shown.

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             (C)  3.  Unpaid  THE UNPAID cash price balance, which  shall

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        be  IS the difference between the cash price  (item 1)  UNDER



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        SUBDIVISION (A) and the down payment  (item 2) above  UNDER

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        SUBDIVISION (B).

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             (D)  4.  Insurance premiums and costs of  THE COST OF ANY

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        INSURANCE PREMIUM OR travel emergency benefits pertaining to the

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        operation of the automobile  for the payment of which  THAT the

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        seller agrees to extend credit to the buyer TO OBTAIN. The

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        INSTALLMENT SALE CONTRACT SHALL SET FORTH THE term of the insur-

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        ance  ,  AND a concise description of the  coverage,  TERMS OF

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        THE INSURANCE POLICY and the travel emergency benefits.  shall be

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        set forth.  If the precise cost of the insurance is not available

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        at the time the contract is signed, an estimated amount, ascer-

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        tained from the current published applicable manual of a recog-

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        nized standard insurance rating bureau, may be set forth in the

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        contract.  The seller shall, within 25 days after making the

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        installment contract, mail or cause to be mailed to the buyer at

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        his or her address as shown on the installment contract a certif-

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        icate or policy of insurance and a statement  ,  showing THE

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        exact cost of the insurance.   All  EACH installment sale

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         contracts  CONTRACT shall contain the following warning,  which

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        shall be  printed prominently in red ink and in 12-point type or

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        larger, directly preceding the notice provided for in

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        section 12(d),  and shall be  enclosed by a continuous heavy

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        line:

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         ________________________________________________________________





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         Warning:  The insurance afforded hereunder does not cover

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         liability for injury to persons or damage to property of others

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         unless so indicated hereon.

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         ________________________________________________________________

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             (E)  5.  Other  costs  necessary or incidental  ,
    which

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        COSTS THAT the seller contracts to pay on behalf of the buyer and

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        for the amount of which the seller agrees to extend credit to the

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        buyer as authorized by this act.  The  costs shall be itemized in

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        the contract as to nature and amount  CONTRACT SHALL CONTAIN AN

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        ITEMIZATION OF THE NATURE AND AMOUNT OF THE COSTS.

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             (F)  6.  Principal  THE PRINCIPAL amount financed, which

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         shall be  IS the total of the  unpaid cash price balance (item

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        3) plus the insurance premium and travel emergency benefit costs

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        (item 4) plus other costs (item 5) for which the seller agrees to

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        extend credit to the buyer  AMOUNTS DESCRIBED IN SUBDIVISIONS

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        (C), (D), AND (E).

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             (G)  7.  Finance  THE FINANCE charge, which is the consider-

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        ation in excess of the  cash price (item 1), excluding insurance

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        premium and travel emergency benefit costs (item 4) and other

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        costs (item 5), which the buyer agrees to pay to the seller for

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        the privilege of purchasing the motor vehicle under the install-

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        ment sale contract  TOTAL OF THE CASH PRICE UNDER SUBDIVISION

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        (A), EXCLUDING THE AMOUNTS DESCRIBED IN SUBDIVISIONS (D) AND

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        (E).

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             (H)  8.  Time  THE TIME balance, which  shall be  IS the

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        total of the  principal amount financed (item 6) plus the finance

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        charge (item 7) and which shall represent  AMOUNTS DESCRIBED IN



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        SUBDIVISIONS (F) AND (G) AND REPRESENTS the total obligation of

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        the buyer  which  THAT he or she agrees to pay in 2 or more

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        scheduled payments.

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             (I)  9.  Payment  THE PAYMENT schedule, which shall state

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        the number of payments, the amount of the payments, and the time

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        of the payments required to liquidate the time balance.

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             (3) An installment sale contract shall state clearly any

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        collateral security taken for the buyer's obligation under the

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        contract.

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             (4) An installment sale contract shall contain a summary

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        notice of the buyer's principal legal rights respecting prepay-

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        ment of the contract and rebate of THE finance charge and rein-

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        statement of the contract in the event of repossession.

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             (5) An installment sale contract shall contain specific pro-

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        visions as to the buyer's liability respecting default charges,

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        repossession, and sale of the motor vehicle in case of default or

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        other breach of contract, and respecting the collateral security,

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        if any.

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             Sec. 18.  (1)  (a)  A seller licensed under this act may

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        charge  , contract for, receive, or collect  THE BUYER a finance

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        charge  , as defined in this act,  on any installment sale con-

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        tract covering the retail sale of a motor vehicle in this state.

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         that does  THE FINANCE CHARGE SHALL not exceed the rate permit-

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        ted by the credit reform act, 1995 PA 162, MCL 445.1851 TO

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        445.1864.







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             (2)  (b)  The SELLER SHALL COMPUTE THE finance charge  shall

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        be computed  on the principal amount financed as determined under

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        section  13(2)(6)  13(2)(F).

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             (3)  (c)  The SELLER SHALL COMPUTE THE finance charge  shall

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        be computed  at the annual rates permitted by subsection  (a)

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        (1) on installment sale contracts that are payable by installment

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        payments, extending for a period of 1 year.  On installment sale

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        contracts providing for installment payments extending for a

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        period  which  THAT is less than or greater than 1 year, the

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        SELLER SHALL COMPUTE THE finance charge  shall be computed

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        proportionately.  If an installment sale contract provides for

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        payment other than in equal successive weekly, semimonthly, or

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        monthly installments, the finance charge may be at a rate that

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        will provide the same annual percentage rate as is permitted on

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        monthly payment contracts  having due regard for  CONSIDERING the

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        schedule of payments in the contract.  The SELLER SHALL DISCLOSE

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        THE annual percentage rate  as used in this act shall be  OF THE

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        INSTALLMENT SALES CONTRACT in accordance with disclosure require-

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        ments of the truth in lending act, title I of the consumer credit

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        protection act, Public Law 90-321, 15 U.S.C. 1601 to 1608, 1610

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        to 1613, 1615, 1631 to 1635, 1637 to 1648, and 1661 to 1667e, and

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        the regulations promulgated under the truth in lending act.

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             (4)  (d)  The SELLER MAY COMPUTE THE finance charge  may be

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        computed  on the basis of a full month for a fractional month

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        period in excess of 10 days.

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             (5)  (e)  A SELLER MAY CHARGE A minimum finance charge of

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        $15.00  may be charged  on an installment sale contract in which



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        the finance charge, when computed at the rates indicated, results

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        in a total charge of less than $15.00.




















































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