Vermont Disclosure Relating To Amount To Be Financed In A Motor Vehicle Retail Installment Contract As Required By 8 V.S.A. Section 2355(f)(1)(J) And Relating to Department of Motor Vehicles Dealer's Vehicle Record Log Sheet

Bulletin
Sunday, June 25, 2006
Banking Bulletin #28

BANKING BULLETIN #28

June 26, 2006

Vermont Disclosure Relating To Amount To Be Financed In A Motor Vehicle Retail Installment Contract As Required By 8 V.S.A. Section 2355(f)(1)(J)

And Relating To Department of Motor Vehicles Dealer’s Vehicle Record Log Sheet

This Bulletin is promulgated pursuant to Title 9 V.S.A. §2355(f)(1)(J), to specify the form of the Vermont Disclosure Relating To Amount To Be Financed In A Motor Vehicle Retail Installment Contract disclosure required by Section 2355(f)(1)(J) (“Disclosure Form”) and to respond to certain inquires regarding the calculation of “Cash Price” for purposes of the Disclosure Form and for purposes of the Department of Motor Vehicles (“DMV”) Dealer’s Vehicle Record log sheet.

Disclosure Form . The purpose of the Disclosure Form is to inform consumers, among other things, of the impact of adding negative equity to a motor vehicle retail installment contract. However, this Disclosure Form is required in connection with every motor vehicle retail installment contract regardless of whether or not the transaction involves negative equity.

Section 2355(f)(1)(J) requires a motor vehicle dealer to provide to the buyer(s) an unexecuted copy of the Disclosure Form prior to consummation of the transaction and requires that the Disclosure Form must be signed by the buyer(s) at the time the buyer(s) signs the motor vehicle retail installment contract. The disclosure must be on a form prescribed by the Commissioner on or before July 1, 2006 and as thereafter amended by the Commissioner of Banking, Insurance, Securities and Health Care Administration by rule.

The required form of disclosure is attached.

The Disclosure Form must be provided to buyers beginning July 1, 2006.

The Disclosure Form shall be printed on a single sheet of paper that is easily distinguished from all other disclosures, applications, or other documents presented to the buyer of the motor vehicle. A copy of the completed form must be given to the buyer(s). The form shall be printed in a size equal to at least 12 point type.

The Disclosure Form shall be attached to and shall become a part of the motor vehicle retail installment contract and must be assigned, sold, or transferred together with any assignment, sale, or transfer of the motor vehicle retail installment contract to which it was originally related.

Violations will be subject to remedies prescribed by law.

Calculation of Cash Price for Purposes of the Disclosure Form and the DMV Dealer’s Vehicle Record Log Sheet . The Department has received multiple inquiries about how to calculate the “cash price” for purposes of the Disclosure Form and for purposes of recording on the Department of Motor Vehicles “Dealer’s Vehicle Record” log sheet (TA-VD-125). In preparing this Bulletin the Department has learned that there are multiple forms of motor vehicle installment sales contracts in use in Vermont. Furthermore, based upon the particular form of motor vehicle installment sales contract used by the dealer, and depending upon the practices and procedures used by any particular dealer, the Department has become aware that the components of the “cash price” vary from dealer to dealer and from installment sales contract to installment sales contract.

In order to make the Disclosure Form meaningful to consumers and consistent with the intent of the legislature, the components of the “cash price” as it appears on the Disclosure Form and on the DMV Dealer’s Vehicle Record log sheet must be consistent regardless of the form of installment sales contract used by a dealer and regardless of any particular dealer practices and procedures in preparing the installment sales contract.

The “cash price” on the Disclosure Form and the DMV Dealer’s Vehicle Record log sheet is the minimum price of the vehicle including any accessories that have been attached to the vehicle and reductions for rebates (i.e., rebates, if any, are deducted in determining the cash price). The “cash price” does not include any service contracts, insurance, warranty contracts, debt cancellation agreements, or similar agreements or contracts, and as discussed below, does not include the purchase and use tax.

Purchase and Use Tax . The Department has received inquiries about whether or not the purchase and use tax due on the motor vehicle should be included as part of the “cash price” of the motor vehicle for purposes of Title 9, Vermont Statutes Annotated, Chapter 59, Motor Vehicle Retail Installment Sales Financing Act, for purposes of calculating the “cash price” for purposes of the Disclosure Form, and for purposes of calculating the “cash price” for the DMV Dealer’s Vehicle Record log sheet.

The purchase and use tax is not part of the “cash price” of a motor vehicle. The Department views the purchase and use tax as one of the “official fees” prescribed by law that must be paid in order for the seller to obtain a lien on the motor vehicle. See 9 V.S.A. §2351(7).

VERMONT DISCLOSURE

RELATING TO AMOUNT TO BE FINANCED

I N A MOTOR VEHICLE RETAIL INSTALLMENT CONTRACT

Name of Buyer(s)

Date

Trade-in or Cancellation of Lease

Dealership allowance for trade-in: $ Amount owed on trade-in or lease

as of (date): $

EQUITY POSITIVE NEGATIVE**

** If the EQUITY is NEGATIVE, the amount the Dealer is offering you in trade for your vehicle is less than what is currently owed on your vehicle. You MAY be financing an amount in this transaction that exceeds the CASH PRICE of your new vehicle.

$

VERMONT DISCLOSURE

RELATING TO AMOUNT TO BE FINANCED

I N A MOTOR VEHICLE RETAIL INSTALLMENT CONTRACT

Name of Buyer(s)

Date

Trade-in or Cancellation of Lease

Dealership allowance for trade-in: $ Amount owed on trade-in or lease

as of (date): $

EQUITY POSITIVE NEGATIVE**

** If the EQUITY is NEGATIVE, the amount the Dealer is offering you in trade for your vehicle is less than what is currently owed on your vehicle. You MAY be financing an amount in this transaction that exceeds the CASH PRICE of your new vehicle.

$

 

 

 

TO: Motor Vehicle Dealerships and purchasers or assignees of Motor Vehicle Retail Installment Contracts

FROM: Department of Banking, Insurance, Securities and Health Care Administration (the “Department”)

DATE: June 26, 2006

RE: Implementation of Department Banking Bulletin #28 (“Bulletin #28”)

The Department is issuing Bulletin #28 which prescribes the form of disclosure required by Act 143 and by 9 V.S.A. §2355(f)(1)(J) (the “Disclosure Form”). Bulletin #28 also responds to inquiries received by the Department regarding calculation of the cash price on the new Disclosure Form and on the Department of Motor Vehicles (“DMV”) Dealer’s Vehicle Record log sheet.

Bulletin #28 also clarifies that the purchase and use tax due on a motor vehicle is an “official fee” and is not part of the “cash price” under Title 9 V.S.A. Chapter 59.

Purchase and Use Tax . The Department is aware that many dealerships utilize platform automation software that automatically completes the documentation based upon the form of motor vehicle retail installment contract used and the purchaser or assignee of the motor vehicle retail installment contract. The Department is also aware that in some instances the platform automation software includes the purchase and use tax in the “cash price” of the motor vehicle rather than in the “official fees.” The Department recognizes that some dealerships may not be able to modify their platform automation software to remove the purchase and use tax from the “cash price” and include it in “official fees” on the motor vehicle retail installment contract by July 1, 2006, consistent with Bulletin #28. The Department expects that by November 1, 2006 dealerships will implement the changes necessary to bring their platform automation system into compliance with Bulletin #28 and properly account for the purchase and use tax on the motor vehicle retail installment contract.

Disclosure Form and DMV Dealer’s Vehicle Record Log Sheet . Regardless of the platform automation software used by the dealership, however, the Department expects that the cash price that appears on the Disclosure Form and on DMV’s Dealer’s Vehicle Record log sheet will comply with Bulletin #28 beginning July 1, 2006.