Bill Text: TX HB2339 | 2017-2018 | 85th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to trade-in credit agreements offered in connection with certain motor vehicle retail installment contracts.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2017-06-09 - Effective on 9/1/17 [HB2339 Detail]

Download: Texas-2017-HB2339-Introduced.html

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By: Thompson of Harris H.B. No. 2339

A BILL TO BE ENTITLED
AN ACT
relating to trade-in credit agreements offered in connection with
certain motor vehicle retail installment contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 348.001, Finance Code, is amended by
adding Subdivision (11) to read as follows:
(11) "Trade-in credit agreement" means a contractual
arrangement under which a retail seller agrees to provide a
specified amount as a vehicle trade-in credit for diminished value
of that vehicle in the event the vehicle is damaged, but not
rendered a total loss, as a result of a collision accident, with the
credit to be applied to the purchase or lease of a different vehicle
from that retail seller. A trade-in agreement is a separate
agreement from the retail installment contract and is not a term of
the retail installment contract.
SECTION 2. Section 348.005, Finance Code, is amended to
read as follows:
Sec. 348.005. ITEMIZED CHARGE. An amount in a retail
installment contract is an itemized charge if the amount is not
included in the cash price and is the amount of:
(1) fees for registration, certificate of title, and
license and any additional registration fees charged by a full
service deputy under Section 520.008, Transportation Code.
(2) any taxes;
(3) fees or charges prescribed by law and connected
with the sale or inspection of the motor vehicle; and
(4) charges authorized for insurance, service
contracts, warranties, automobile club memberships, trade-in
credit agreements, or a debt cancellation agreement by Subchapter
C.
SECTION 3. Subchapter B, Chapter 348, Finance Code is
amended by adding Section 348.125 to read as follow:
Sec. 348.125. TRADE-IN CREDIT AGREEMENT OFFERED IN
CONNECTION WITH RETAIL INSTALLMENT CONTRACT. (a) A retail seller
may, at the time a retail installment contract is executed, offer to
sell to the retail buyer a trade-in credit agreement or similarly
named agreement.
(b) A trade-in credit agreement is not considered an
insurance product.
(c) To ensure the faithful performance of a retail seller's
obligations to the retail buyer under a trade-in credit agreement,
the retail seller must be insured under a contractual liability
reimbursement policy approved by the commissioner of insurance,
issued for the benefit of Texas residents.
(d) In addition to other disclosures required by state or
federal law, the retail seller shall give the retail buyer a copy of
the written trade-in agreement and written notice at the time the
retail installment contract is executed that the retail buyer:
(1) is not required to purchase the trade-in credit
agreement as a condition for approval of the contract;
(2) is entitled to cancel the trade-in credit
agreement and receive full refund before the 31st day after the date
the contract is executed;
(3) is able to terminate the trade-in agreement at any
time after the 30th day after the date the contract is executed and
receive a pro-rata refund less any applicable cancellation fee
which may not exceed $50; and
(4) has been provided a clear and concise disclosure
as to the amount of the credit available during the term of the
trade-in credit agreement.
(e) The amount charged for a trade-in credit agreement made
in connection with a retail installment contract may not exceed
five percent of the cash price of the vehicle that is the subject of
the retail installment contract, including any attached
accessories and excluding the price of services related to the
sale, the price of service contracts, taxes, and fees for license,
title, and registration.
(f) A trade-in credit agreement shall require the retail
buyer to provide proof of insurance settlement documents in order
to obtain a credit. A trade-in credit agreement may not require the
retail buyer to provide any other documentation in order to obtain a
credit.
(g) If a retail seller enters a trade-in credit agreement
with a retail buyer, then the retail seller must comply with the
terms of the trade-in agreement in connection with the purchase or
lease of a subsequent motor vehicle. A retail seller must provide
any credit required under a trade-in credit agreement at the time of
the purchase or lease of a subsequent motor vehicle.
(h) The benefit to be provided in connection with a trade-in
credit agreement must bear a reasonable relationship to the amount
charged for the agreement and the amount, term, and conditions of
the retail installment contract.
SECTION 4. Sections 348.208 (b) and (c), Finance Code, are
amended to read as follows:
(b) A retail installment contract may include as a separate
charge an amount for:
(1) motor vehicle property damage or bodily injury
liability insurance;
(2) mechanical breakdown insurance;
(3) participation in a motor vehicle theft protection
plan;
(4) insurance to reimburse the retail buyer for the
amount computed by subtracting the proceeds of the buyer's basic
collision policy on the motor vehicle from the amount owed on the
vehicle if the vehicle has been rendered a total loss;
(5) a warranty or service contract relating to the
motor vehicle;
(6) an identity recovery service contract; [or]
(7) a debt cancellation agreement if the agreement is
included as a term of a retail installment contract under Section
348.124; or
(8) a trade-in credit agreement.
(c) Notwithstanding any other law, service contracts,
[and]
debt cancellation agreements, and trade-in credit agreements sold
by a retail seller of a motor vehicle to a retail buyer are not
subject to Chapter 101 or 226, Insurance Code.
SECTION 5. This Act takes effect September 1, 2017.