What's happening
This bill gives the Department of Financial Services authority to regulate motor vehicle sales and financing, requires clearer contract disclosures, and bans conditional car deliveries.
Why it matters
Expands consumer protection. by giving the Department of Financial Services direct oversight over both new and used car sales and financing, meaning car dealers and lenders will face stricter regulation and increased accountability.
Requires complete transparency in car purchase contracts. Dealers must clearly itemize the vehicle price, every add-on or option, all lender-imposed fees, and the total price, helping buyers understand exactly what they're paying for and reducing the risk of hidden charges.
Empowers car buyers with contract safeguards. Buyers must receive and sign off on all credit application documents, and if a dealer fails to comply, the buyer can void the sale within 30 days and get a full refund—including financing costs and the value of any trade-in—plus legal fees if they prevail in court.
Stops “yo-yo” or conditional deliveries. Once a buyer drives off with a car, ownership is final (except for non-payment), preventing dealers from reclaiming vehicles if financing falls through and protecting buyers from being forced into less favorable loan terms after the sale.
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Who cares
Headline styles
Regulate Car Dealer Sales
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Referred to banks
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Regulate Car Dealer Sales
In Assembly Committee · Consumer Affairs And Protection · Sponsor Michael Blake
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5274
2017-2018 Regular Sessions
IN SENATE
March 20, 2017
Introduced by Sens. SAVINO, KLEIN, HAMILTON -- read twice and ordered printed, and when printed to be committed to the Committee on Banks
AN ACT to amend the financial services law, in relation to authorizing the superintendent of financial services to oversee and regulate sales of motor vehicles to consumers; to amend the personal property law, in relation to the contents of motor vehicle retail installment contracts; and to amend the vehicle and traffic law, in relation to requiring motor vehicle dealers to provide credit applicants with a copy of all loan application documents, and prohibiting conditional deliveries of motor vehicles
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 301 of the financial services law is amended by adding a new subsection (d) to read as follows:
(d) The superintendent shall have the power to oversee and regulate the financing of both new and used motor vehicles purchased in this state, including the implementation of article nine of the personal property law, and motor vehicle dealer transactions with consumers, including those subject to the provisions of article sixteen of the vehicle and traffic law.
§ 2. Section 302 of the personal property law is amended by adding two new subdivisions 5-a and 5-b to read as follows:
5-a. Every retail installment contract shall include the following statement in twelve point type:
"Conditional Deliveries Prohibited: In accordance with Section 417-d of the New York State Vehicle and Traffic Law, when this contract is signed by the dealer and the buyer, and the buyer takes the vehicle off the dealer lot, the buyer is the owner of the vehicle and has the right to keep the vehicle except for reasons of non-payment of this contract. The dealer may not demand that the vehicle be returned for any reason, including alleged denial of any financing. Dealers and lenders may only
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00441-01-7
S. 5274 2
demand the vehicle be returned for reasons of non-payment by the buyer. Dealers cannot make an exception to this provision with another contract or document."
5-b. Every retail installment contract shall separately itemize each of the following:
(a) the price paid for the motor vehicle;
(b) the price of each option, add-on and additional charge relating to the sale of the motor vehicle;
(c) all fees imposed by a lender upon the dealer or buyer related to financing the purchase of the motor vehicle;
(d) the total price of the motor vehicle including all charges imposed pursuant to paragraphs (a), (b) and (c) of this subdivision.
§ 3. The vehicle and traffic law is amended by adding two new sections 417-c and 417-d to read as follows:
§ 417-c. Credit applications for purchase of motor vehicles. 1. Every dealer which applies for or grants eligibility for the provision of credit for the purchase of a motor vehicle shall review and confirm with the applicant for such credit all information included in the application therefor. Such review and confirmation shall include specific consideration of each item of information as to its accuracy to the best of the knowledge of the parties. No such application shall be deemed complete nor shall it be submitted unless the dealer and the credit applicant shall have signed their signatures attesting that all information in the application is accurate and true to the best of their knowledge.
2. The failure of any dealer to comply with the provisions of this section, shall grant any credit applicant, who takes delivery of a motor vehicle purchased on the basis of credit acquired for him or her by such dealer, the option to void the sale of such motor vehicle within thirty days of the delivery of such vehicle. Upon the voiding of any sale pursuant to this subdivision the dealer shall immediately repay to the purchaser all costs incurred by such purchaser as a consequence of the voided sale, including any financing charges and interest, and the fair market private sale value of any motor vehicle traded-in in the course of such sale. Furthermore, in the event a purchaser commences a cause of action to enforce the provisions of this subdivision, a prevailing purchaser shall be entitled to court costs and reasonable attorney's fees.
3. The provisions of this section shall not be deemed to limit any other right or remedy of a plaintiff in law or equity.
§ 417-d. Conditional deliveries; prohibited. 1. No motor vehicle sold by a dealer shall be delivered to the possession of a purchaser subject to any condition to be complied with after delivery of possession of the motor vehicle.
2. All terms and conditions of the sale of a motor vehicle shall be fully and clearly disclosed, in writing, to the purchaser prior to the delivery of possession of such vehicle, and shall be signed by both the dealer and the purchaser.
3. Every dealer shall provide a copy of the written disclosures required by subdivision two of this section, and shall also maintain a copy thereof for a period of not less than seven years.
§ 4. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the financial services law, in relation to authorizing the superintendent of financial services to oversee and regulate sales of motor vehicles to consumers; to amend the personal property law, in relation to the contents of motor vehicle retail installment contracts; and to amend the vehicle and traffic law, in relation to requiring motor vehicle dealers to provide credit applicants with a copy of all loan application documents, and prohibiting conditional deliveries of motor vehicles
Purpose
This bill will make the auto loan financing process more transparent through disclosure and documentation requirements. It will also provide remedies for consumers who are not provided with documentation. Finally, it prevents conditional deliveries of vehicles.
Summary of provisions
Section 1: Amends Section 301 of the financial services law to add a new subsection (d) which permits the superintendent of the Department of Financial Services to oversee and regulate the financing of new and used motor vehicles.
Read the full memo (862 words)
Section 2: Amends Section 302 of the personal property law to add new subdivisions 5-a and 5b. 5-a will require a disclosure on motor vehicle retail installment contracts to consumers that conditional deliveries are not allowed. 5-b will require that all motor vehicle retail installment contracts itemize the following: the price paid for the vehicle, the price of each option, add-on and additional charge relating to the sale of the motor vehicle, all fees imposed by a lender upon the dealer or buyer which are related to the financing of the motor vehicle, and the total price of the motor vehicle including all charges.
Section 3: Amends the vehicle and traffic law to add two new sections 417-c and 417-d which provide that dealers must review and confirm with all credit applicants the accuracy of the information contained on any loan application forms, and both the dealer and applicant must attest to the truth of the information to the best of their knowledge. Failure of the dealer to comply with these provisions shall entitle the buyer to void the sale of the vehicle within thirty days and receive a full refund for the vehicle and financing charges, and the fair market private sale value of any vehicle traded in. Prevailing plaintiffs under this section will be entitled to court costs and reasonable attorney's fees. This section also explicitly prohibits conditional deliveries. All sale terms must be in writing and clearly disclosed to the consumer. Every dealer shall provide a copy of the written disclosures and maintain them for a period of not less than seven years.
Section 4: This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Existing law
Under current law, conditional deliveries are not explicitly prohibited. Disclosure requirements during the financing and sale of vehicles, as well as remedies for consumers, are not as robust. The Department of Financial Services does not currently have jurisdiction over the financing of motor vehicles.
Justification
Abuses in the auto loan financing industry are harming many of New York's most vulnerable consumers. Most consumers do not have the industry-specific knowledge to properly negotiate with auto dealers on even footing, and the auto loan financing process is opaque. Requirements for disclosures and maintenance of important loan documents must be improved.
Additionally, consumers are often not aware that with subprime auto loans, the cost of financing can be more than double the actual value of the purchased vehicle, due to high APRs and expensive add-ons like warranties and service contracts. To make matters worse, dealerships sometimes provide fraudulent loan applications to lenders without informing consumers that the application was ever filed. Lenders sometimes turn a blind eye to this activity, even when consumers inform lenders of it. False applications result in the approval of loans which consumers cannot afford.
Another confusing issue for purchasers buying vehicles are conditional deliveries, sometimes used to scam consumers into taking bad deals on autos. Spot delivery scams are a problem that could be addressed through conditional delivery bans and transparency measures that inform consumers of the ban. Conditional delivery scams are also known as "spot delivery" scams or "yo-yo financing" scams. These scams involve putting a buyer into a vehicle and having the buyer take it home; the dealership then calls the buyer later to tell them the favorable terms on which they purchased the vehicle are invalid. The buyer, enjoying their new vehicle and fearing they have no other options, often agrees to the less favorable terms simply for the sake of keeping the vehicle. The less favorable terms are more profitable for the dealer.
This legislation would help consumers better understand the auto financing process with more transparent documentation, and would prevent confusing and deceptive tactics like spot delivery scams.
Legislative history
S.5490A of 2015 (Savino) - Referred to Banks S.5490A of 2016 (Savino) - Reported from Banks and committed to Rules Committee
Fiscal implications
None.
Local fiscal implications
None.
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.