1. The Laws of New York
  2. Consolidated Laws
  3. Personal Property
  4. Article 9: Motor Vehicle Retail Instalment Sales Act


Section 302 Requirements as to retail instalment contracts

Personal Property (PEP)

1. A retail instalment contract shall be in writing, shall contain all the agreements of the parties and shall be signed by the buyer and the seller.

  2. The printed portion of the contract shall be in at least eight point type. The contract shall contain printed or written in a size equal to at least ten-point bold type:

  (a) Both at the top of the contract and directly above the space reserved for the signature of the buyer, the words "RETAIL INSTALMENT CONTRACT";

  (b) A specific statement that liability insurance coverage for bodily injury and property damage caused to others is not included, if that is the case; and

  (c) One of the following notices: "NOTICE TO THE BUYER: 1. Do not sign this contract before you read it or if it contains any blank space. 2. You are entitled to a completely filled in copy of this contract when you sign it. 3. Under the law, you have the following rights, among others: (a) To pay off in advance the full amount due and to obtain a partial refund of the credit service charge; (b) To redeem the property if repossessed for a default; (c) To require, under certain conditions, a resale of the property if repossessed. 4. According to law you have the privilege of purchasing the insurance on the motor vehicle provided for in this contract from an agent or broker of your own selection," or "NOTICE TO THE BUYER: 1. Do not sign this agreement before you read it or if it contains any blank space. 2. You are entitled to a completely filled in copy of this agreement. 3. Under the law, you have the right to pay off in advance the full amount due and under certain conditions to obtain a partial refund of the credit service charge. 4. According to law you have the privilege of purchasing the insurance on the motor vehicle provided for in this contract from an agent or broker of your own selection", or "NOTICE TO THE BUYER: 1. Do not sign this agreement before you read it or if it contains any blank space. 2. You are entitled to a completely filled in copy of this agreement. 3. Under the law, you have the right to pay off in advance the full amount due. If you do so, you may, depending on the nature of the credit service charge, either: (a) prepay without penalty, or (b) under certain circumstances obtain a rebate of the credit service charge. 4. According to law you have the privilege of purchasing the insurance on the motor vehicle provided for in this contract from an agent or broker of your own selection".

  3. The seller shall deliver to the buyer, or mail to him at his address shown on the contract, a copy of the contract signed by the seller. Until the seller does so, a buyer who has not received delivery of the motor vehicle shall have an unconditional right to cancel the contract and to receive immediate refund of all payments made and redelivery of all goods traded-in to the seller on account of or in contemplation of the contract. Any acknowledgment by the buyer of delivery of a copy of the contract shall be printed or written in a size equal to at least ten point bold type and, if contained in the contract, shall also appear directly above the legend required above the buyer's signature by sub-division two (a) of this section.

  4. The contract shall contain the names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the motor vehicle including its make, year model, model and identification numbers or marks.

  5. The contract shall contain:

  (1) All items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended;

  (2) The amount, if any, included for insurance, specifying and describing the coverages and the amount included for each type of coverage; however, if any insurance policy complies with the standard provisions form for automobile physical damage policy or any other automobile physical damage policy form which is equally or more favorable to the insured and which is filed with the superintendent of financial services, the contract need not contain a description of any type of coverage under such standard automobile physical damage policy form or a specification of the amount included in the contract therefor if it contains a specification of the type or types of coverage and the total amount included in the contract therefor.

  6. The amount, if any, included for insurance, shall not exceed the premiums chargeable in accordance with rate filings made with the superintendent of financial services for similar insurance. The seller or financing agency, if insurance on the motor vehicle is included in a retail instalment contract, shall within thirty days after execution of the retail instalment contract send or cause to be sent to the buyer a policy or policies or certificate of insurance, written by an insurance company authorized to do business in this state, clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all the terms, exceptions, limitations, restrictions and conditions of the contract or contracts of insurance. The buyer of a motor vehicle under a retail instalment contract shall have the privilege of purchasing such insurance from an agent or broker of his own selection and of selecting an insurance company acceptable to the seller; provided, however, that the inclusion of the insurance premium in the retail instalment contract when the buyer selects the agent, broker or company, shall be optional with the seller and in such case the seller or financing agency shall have no obligation to send, or cause to be sent, to the buyer the policy or certificate of insurance. Nothing contained in this subdivision however shall be deemed to modify, limit or in any way contravene the provisions of section two thousand five hundred two of the insurance law.

  If any such policy or certificate of insurance on the motor vehicle is cancelled, the unearned insurance premium refund received by the holder of the contract, or, if the amount included therefor in the contract exceeds the cost to the holder of the contract for such insurance, the unearned portion of the amount so included, together with the unearned portion of the credit service charge applicable thereto, shall be credited to the final maturing instalments of the retail instalment contract except to the extent applied toward payment for similar insurance protecting the interests of the buyer and the holder of the contract or either of them.

  The amount, if any, included for group credit life insurance, credit unemployment insurance, or for insurance other than on the motor vehicle shall not exceed the premiums chargeable in accordance with rate filings made with the superintendent of financial services for such insurance by the insurer. If such group credit life or other insurance is cancelled the refund for unearned insurance premiums received or receivable by the holder of the contract, or the excess of the amount included in the contract for group credit life insurance over the premiums paid or payable by the holder of the contract therefor, together with, in either case, the unearned portion of the credit service charge applicable thereto, shall be credited to the final maturing instalments of the retail instalment contract, provided that no such credit need be made if the amount thereof would be less than one dollar.

  6-a. If the buyer is obligated under the terms of a retail instalment contract to maintain insurance on the motor vehicle that is the subject of the contract and if subsequent to the execution of the contract the buyer fails to maintain the insurance, the holder may make advances to procure the equivalent limits of insurance for either the interests of the buyer and the holder or of either of them, and any amount so advanced may be the subject of a credit service charge from the date of such advance as though such amount was part of the amount computed as provided in the closing paragraph of subdivision one of section three hundred three of this article. Each amount so advanced shall be secured by the motor vehicle if so provided in the contract and if the holder notifies the buyer in writing of the advance of such amount and of his or her option to repay such amount in any one of the following ways:

  (a) Full payment within ten days from the date of giving or mailing the notice;

  (b) Full amortization during the term of the insurance or the remaining term of the contract, at the option of the holder;

  (c) If offered by the holder, as a final balloon payment payable one month after the last scheduled payment under the contract;

  (d) If offered by the holder, full amortization after the term of the contract, to be payable in instalments which do not exceed the average instalment payable under the contract; or

  (e) If offered by the holder, any other amortization plan.

  If the buyer neither pays in full the amount so advanced nor notifies the holder in writing of his or her choice regarding amortization options before the expiration of ten days from the date of giving or mailing of the notice by the holder, the holder shall amortize the amount so advanced pursuant to paragraph (b) of this subdivision.

  7. The holder of a retail instalment contract may, if the contract so provides, collect a delinquency and collection charge on each instalment in default for a period not less than ten days in an amount not in excess of the rate or rates agreed to in the contract. In addition to such delinquency and collection charge, the retail instalment contract may provide for the payment of attorneys' fees not exceeding fifteen percent of the amount due and payable under such contract where such contract is referred to an attorney not a salaried employee of the holder of the contract for collection, plus the court costs.

  8. No retail instalment contract shall be signed by any party thereto when it contains blank spaces to be filled in after it has been signed except that, if delivery of the motor vehicle is not made at the time of the execution of the contract, the identifying numbers or marks of the motor vehicle or similar information and the due date of the first instalment may be inserted in the contract after its execution. The buyer's written acknowledgment, conforming to the requirements of subdivision three of this section, of delivery of a copy of a contract shall be conclusive proof of such delivery and of compliance with this subdivision in any action or proceeding by or against an assignee of the contract without knowledge to the contrary when he purchases the contract.

  9. (a) No retail instalment contract shall contain any provision by which the buyer agrees not to assert against an assignee a claim or defense arising out of the sale or require or entail the execution of any note or series of notes, which when separately negotiated will cut off as to third parties any right of action or defense which the buyer may have against the seller. The assignee of a retail installment contract or obligation shall be subject to all claims and defenses of the buyer against the seller arising from the sale notwithstanding any agreement to the contrary, but the assignee's liability under this subdivision shall not exceed the amount owing to the assignee at the time the claim or defense is asserted against the assignee.

  (b) Limitations on assignee liability referred to in paragraph (a) of this subdivision shall be exclusive of any reasonable costs and attorney's fees the court may award.

  10. Notwithstanding any contrary provision of the personal property law, lien law, banking law or other law: (a) a financing agency may purchase a retail instalment contract from a seller on such terms and conditions and for such price as may be mutually agreed upon; and (b) no filing of the assignment, no notice to the buyer of the assignment, and no requirement that the seller be deprived of dominion over payments upon the contract or over the vehicle if repossessed by or returned to the seller, shall be necessary to the validity of a written assignment of a retail instalment contract as against creditors, subsequent purchasers, pledgees, mortgagees or encumbrancers of the seller.

  11. Unless the buyer has notice of actual or intended assignment of a retail instalment contract, payment thereunder made by the buyer to the last known holder of such contract shall be binding upon all subsequent holders or assignees.

  12. Upon written request from the buyer, the holder of a retail instalment contract shall give or forward to the buyer a written statement of the dates and amounts of payments and the total amount unpaid under such contract. A buyer shall be given a written receipt for any payment when made in cash.

  13. No retail instalment contract shall contain any provision by which:

  (a) in the absence of the buyer's default, the holder may, arbitrarily and without reasonable cause, accelerate the maturity of any part or all of the amount owing thereon;

  (b) a power of attorney is given to confess judgment in this state, or an assignment of wages is given;

  (c) the seller or holder of the contract or other person acting on his behalf is given authority to enter upon the buyer's premises unlawfully, or to commit any breach of the peace in the repossession of the motor vehicle;

  (d) the buyer waives any right of action against the seller or holder of the contract, or other person acting on his behalf, for any illegal act committed in the collection of payments under the contract or in the repossession of the motor vehicle;

  (e) the buyer executes a power of attorney appointing the seller or holder of the contract, or other person acting on his behalf, as the buyer's agent in collection of payments under the contract or in the repossession of the motor vehicle; provided, however, that this paragraph shall not prohibit the inclusion in a retail instalment contract of a limited power of attorney or other provision authorizing the holder to execute in the name of the buyer any proofs of insurance claims or losses or to endorse the name of the buyer on any insurance settlement draft or check;

  (f) the seller is relieved from liability for any legal remedy which the buyer may have had against the seller under the contract, or any separate instrument executed in connection therewith;

  (g) the maturity of any part or all of the amount owing thereon is accelerated where, following a default consisting solely of the failure to make timely instalment payments and the subsequent repossession of the motor vehicle, the buyer makes timely tender of an amount which would be sufficient to redeem the vehicle in the absence of such provision;

  (h) the buyer waives any right to a trial by jury in any action or proceeding arising out of the contract.

  14. Any such prohibited provision shall be void but shall not otherwise affect the validity of the contract.