Motor Vehicle Retail Sellers and Sales Finance Companies
Motor Vehicle Retail Sellers and Sales Finance Companies Forms and Reports.
NOTICE REGARDING HB 1243 AND RSA 361-A: HB 1243, which repealed and reenacted RSA 361-A, was signed into law on August 2, 2024. The new provisions of RSA 361-A went into effect upon signing. Below, please find a list of questions the Banking Department has frequently been asked about the specific provisions found in the new RSA 361-A.
Please note that the following frequently asked questions and answers are provided as informal guidance only. The Banking Department cannot act as your attorney and cannot provide legal guidance. If you have specific questions, you should consult with a private attorney.
Question: Does RSA 361-A prohibit a retail seller from charging an “administrative fee” (sometimes referred to as an “administration fee” or “admin fee”) in connection with a retail installment transaction?
Answer: If the administrative fee is in the nature of a tax, registration fee, license fee, or other fee and the administrative fee is charged by the retail seller on every motor vehicle sale, regardless of whether the sale is for cash or subject to a retail installment contract, RSA 361-A does not prohibit the retail seller from charging such a fee in connection with a retail installment transaction. However, the administrative fee may not be charged in a way that constitutes an unfair method of competition or an unfair or deceptive act or practice.
Question: Can the notice required by RSA 361-A:15, IX and RSA 361-A:16, IX be included as an addendum to the retail installment contract until such time as company forms are fully updated?
Answer: An addendum shall be permitted provided that the consumer indicates that it has been read, either electronically or in print.
Question: Are securitization trusts considered “holders” for purposes of RSA 361-A:20, I?
Answer: No, securitization trusts shall not be considered “holders” for purposes of RSA 361-A:20.
Question: Does the assignment from the dealer to a financial company purchasing the retail installment contract prior to first payment trigger a notice pursuant to RSA 361-A:20, I?
Answer: Yes. Generally speaking, the provisions of RSA 361-A should be read in favor of providing notice to consumers after any transfer.
Question: What do the terms “principal”, “total interest charged for the period of such loan”, and “nature of the security” mean for purposes of RSA 361-A:20, VII?
Answer: “Principal” means the current, unpaid balance of loan amount agreed to on the retail installment contract and excludes any late fees, interest, or other charges that may be assessed or owed after the retail installment contract has been executed. “Total interest charged for the period of such loan” means the interest for the period covered by the current payment, not the interest for the life of the loan. “Nature of the security” means the year, make, and model of the vehicle that is the subject of the retail installment contract.
Question: (a) What does the term “ancillary product” mean for purposes of RSA 361-A:20, VIII; and (b) When does the 21 calendar day countdown begin for purposes of RSA 361-A:20, VIII (a); and (c)Who is responsible for the refund contemplated in RSA 361-A:20, VIII(c)?
Answer: (a) “Ancillary product” means a secondary service that is purchased in addition to and in support of the vehicle subject to the retail installment contract. The term may include but is not limited to extended warranties, service contracts, and credit protection contracts. Guaranteed asset protection contracts and waivers are governed by other sections of RSA 361-A as well as RSA 361-E.
(b) The 21 calendar days begins on the date any ancillary product is canceled, pursuant to RSA 361-A: 20, VIII(b). In the event an ancillary product provides coverage beyond the length of the retail installment contract, the requirements for cancellation and refunds shall be governed by the terms of the ancillary contract itself and negotiated between the buyer and the provider of services under the ancillary product contract.
(c) Pursuant to RSA 361-A:20, VIII(c), in the event an ancillary product is cancelled or a triggering event occurs, the holder of the contract is required to provide notice to the provider of services under the ancillary product contract. The holder shall provide a copy of the notice to the buyer of the vehicle or shall mail the notice to the buyer’s last known address. The provider of services is then responsible for issuing any applicable refunds pursuant to the terms of the agreement.
Question: Securitization trusts are trusts established for the purpose of pooling retail installment contracts and reconstituting them into securities. Are securitization trusts required to obtain a sales finance company license under RSA 361-A:2?
Answer: No, they are not required to obtain a sales finance company license. The licensing requirement will typically be fulfilled by the servicer or other entity responsible for servicing the contracts in the securitization trust.
Question: Please confirm that sales finance company licenses held by entities engaged only in taking assignments of closed-end motor vehicle leases may be surrendered.
Answer: Yes. HB 1243 removed motor vehicle leases from the Banking Department’s regulatory authority. Motor vehicle leases remain subject to regulation under RSA chapter 361-D, which is a non-banking law that expressly governs motor vehicle leasing. RSA 361-D:27 states: “In addition to the private rights created by this chapter, compliance with the requirements imposed under this chapter shall be enforced by the [New Hampshire] [D]epartment of [J]ustice.”
Question: What is the Banking Department’s no-action process relating to HB 1243?
Answer: The no-action process is a review process through which the Department’s staff advises financial institutions on whether it would likely recommend enforcement action if the institution fails to take a specified action. Financial institutions impacted by HB 1243 may choose to submit a no-action request to resolve implementation concerns as they relate to the Banking Department’s regulatory authority.
As a general matter, the Banking Department requires that no-action requests include (a) the name of the institution on whose behalf the request is being made, and the names of any other entities or persons involved; (b) a detailed summary of the particular facts and circumstances giving rise to the request; and (c) the institution’s opinion on the matter and the legal basis for its opinion. The requester should identify the specific provisions of HB 1243 from which it is seeking no-action relief and should provide a detailed statement of the specific operational challenges that the institution is facing as well as the ongoing efforts being made by the institution to achieve compliance with HB 1243. The Department’s staff will respond to such requests as expeditiously as possible, and our staff may request additional information if it deems it necessary to respond to the request. Please bear in mind that responses to such requests do not constitute legal advice. For any institution that wishes to pursue a no-action request, the submission should be emailed to nhbd@banking.nh.gov.
Question: Are no-action requests relating to HB 1243 confidential?
Answer: Whether a no-action request is confidential is governed by New Hampshire’s Right-to-Know Law, RSA 91-A, and any other confidentiality law that may be applicable to a particular request, including RSA 383:10-b. The Right-to-Know Law sets forth the process for obtaining the governmental records of public bodies and agencies in New Hampshire. If the submitter of a no-action letter requests confidential treatment, the Banking Department generally does not respond to such a request until the Department actually receives a records request seeking disclosure. If the Department were to receive a records request for a no-action request and/or any response, the Department—at that time—would determine the validity of a submitter’s request for confidential treatment of any of the subject records. The decision to release or withhold governmental records lies with the Department, although a determination on whether a particular record becomes public may ultimately be decided by a court.
Question: What does the term “time balance” mean as that term is used in RSA 361-A:15 and RSA 361-A:16?
Answer: “Time balance” is the total amount owed on the loan, calculated as either (a) the amount of one installment payment multiplied by the number of payments due on the contract (assuming all payments are made on time) or (b) the total amount owed when accelerated if defaulted.
Question: RSA 361-A:15, IX and RSA 361-A:16, IX provide: “The retail installment contract shall include a notice, printed in type size equal to at least 10- point type, stating that the consumer may file a complaint with the commissioner along with the department’s contact information.” Is there specific contact information or language that should be used for the notice required by these statutes?
Answer: The notice must at least contain the statutorily required information. For example, the following notice is considered acceptable:
NOTICE OF RIGHT TO FILE A COMPLAINT:
NH RSA 361-A governs retail installment contract requirements in New Hampshire. This agreement is a retail installment contract. You may file a complaint with the State of New Hampshire Banking Department regarding conduct that may violate any provisions of RSA 361-A or administrative rules adopted under the authority of RSA 361-A.
The contact information for the State of New Hampshire Banking Department is:
Email: legal@banking.nh.gov
Phone: 603-271-3561
Mail: State of NH Banking Department, 53 Regional Drive, Suite 200, Concord, NH 03301
Question: What is the difference between the definition of “cash sale price” in the new version of RSA 361-A versus the old version of RSA 361-A?
Answer: RSA 361-A:1, IV now defines “cash sale price” as the price at which the retail seller offers in the ordinary course of business to sell for cash the motor vehicle that is the subject of the retail installment contract. HB 1243 was intended to simplify the definition of “cash sale price” without changing the meaning of the statute. Thus, the “cash sale price” may continue to include (as was permissible under the prior version of RSA 361-A) taxes, registration, license and other fees, and charges for accessories and their installation and for delivery, servicing, repairing, or improving the motor vehicle that are offered by the retail seller in the ordinary course of business.
Question: RSA 361-A:15, IV (pertaining to indirect loans) and RSA 361-A:16, IV (pertaining to direct loans) require the retail installment contract to contain a calculation that includes, among other things, “[t]he amount, if any, paid to the borrower,” “[t]he description and amounts, if any, of prepaid finance charges,” and “[t]he total of prepaid finance charges.” Do these provisions require the retail installment contract to contain line items for amounts paid to the borrower or prepaid finance charges in cases where the retail installment transaction does not include any such payments or charges?
Answer: No. While it is permissible for the retail installment contract to contain line items for amounts paid to the borrower and prepaid finance charges indicating that these payments/charges are $0 in such cases, it is not required by RSA 361-A:15, IV or RSA 361-A:16, IV.
Licensing
All new Motor Vehicle Retail Sellers and Sales Finance Company licensing in New Hampshire is done via the Nationwide Multistate Licensing System (NMLS).
If your company is currently licensed and changes of ownership or status occur the company must update the NMLS. Follow up information may be requested.
Refund Policy
All fees for licenses and registrations are nonrefundable and payable in advance. In the event of an overpayment, a refund request would need to be reviewed and approved by the Banking Department.
Am I a Sales Finance Company?
If you are involved in providing the funds for the loan directly to a NH consumer, or taking the assignment of a loan from a NH retail seller or other sales finance company, or servicing these loans, you must be licensed as a sales finance company. This includes "buy here/pay here" entities that create payment plans for buyers that are buying their inventory, regardless if there is any interest being collected.
Am I a Retail Seller?
If you are completing any of the financing paperwork but never providing the funds for the loan, you would be licensed as a retail seller.
Annual Reports
Sales Finance Companies must provide Annual Reports. Annual Reports must be completed on or before March 31st of each year concerning the operations of the preceding year and then uploaded to NMLS. Surrendering the licensee does not relieve the licensee of this responsibility. Copies of the forms are as follows:
NOTE: With the change to RSA 361-A effective August 2, 2024, Retail Sellers will be required to file an annual report by March 31 of each year for the previous calendar year. More information will be provided by December 31, 2024. An annual report form for Retail Sellers is not yet available.
The New Hampshire Banking Department has created a tutorial video to assist you in completing the Annual Report.
Please note that the video is hosted on YouTube and the New Hampshire Banking Department is not responsible for any advertising or other content on YouTube and the New Hampshire Banking Department does not endorse that content.
View the sales finance company Annual Report tutorial here
Laws
Licensees must be in compliance with all applicable state and federal laws. The main NH law that is applicable to retail sellers and finance companies is NH RSA 361-A, effective until August 1, 2024. Please see below for HB 1243.
Please note that HB 1243 was signed into law on August 2, 2024. Until RSA 361-A is updated on the New Hampshire General Court website, please refer to this link to view the final version of HB 1243.
Please be aware of the new changes to the FTC Standards for Safeguarding Customer Information that went into effect June 9, 2023. All licensees (both retail sellers and sales finance companies) meet the definition of a “financial institution” and must be in compliance with the new standards. The requirements can be found here: https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-314.
Examinations
Sales Finance Companies and Retail Sellers are required to be examined at least every 24 months, though it may be sooner or more frequent as needed. The Consumer Credit FAQ page gives additional information for what is to be expected for examination.