85R13971 EES-F
	By: Thompson of Harris	H.B. No. 2339
	Substitute the following for H.B. No. 2339:
	By:  Burrows	C.S.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 motor vehicle trade-in credit for the
	diminished value of the motor vehicle that is the subject of the
	retail installment contract in connection with which the trade-in
	credit agreement is offered if the motor vehicle is damaged but not
	rendered a total loss as a result of a collision accident, with the
	credit to be applied toward the purchase or lease of a different
	motor vehicle from the retail seller or an affiliate of the retail
	seller. A trade-in credit agreement is a separate agreement from a
	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 deputy as
	authorized by rules adopted under Section 520.0071, 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 follows:
	Sec. 348.125.  TRADE-IN CREDIT AGREEMENTS OFFERED IN
	CONNECTION WITH RETAIL INSTALLMENT CONTRACTS.  (a)  A retail seller
	may, at the time a retail installment contract is executed, offer to
	sell to a 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 a 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 and
	issued for the benefit of Texas residents.
	(d)  In addition to other disclosures required by state or
	federal law, if a retail seller offers to a retail buyer a trade-in
	credit agreement, the retail seller shall give the retail buyer at
	the time the retail installment contract is executed a copy of the
	written trade-in credit agreement and written notice that the
	retail buyer:
	(1)  is not required to purchase the trade-in credit
	agreement as a condition for approval of the retail installment
	contract;
	(2)  is entitled to cancel the trade-in credit
	agreement before the 31st day after the date the retail installment
	contract is executed and receive a full refund;
	(3)  may terminate the trade-in credit agreement at any
	time on or after the 31st day after the date the retail installment
	contract is executed and receive a pro rata refund minus any
	applicable cancellation fee which may not exceed $50; and
	(4)  has been provided a clear and concise disclosure
	of 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
	offered in connection with a retail installment contract may not
	exceed five percent of the cash price of the motor 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 must require the retail
	buyer to provide proof of insurance settlement documents in order
	to obtain the credit. A trade-in credit agreement may not require
	the retail buyer to provide any other documentation in order to
	obtain the credit.
	(g)  If a retail seller enters a trade-in credit agreement
	with a retail buyer, the retail seller must comply with the terms of
	the trade-in credit 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 trade-in credit 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.