By: Thompson of Harris H.B. No. 2339
(Senate Sponsor - Zaffirini)
(In the Senate - Received from the House May 5, 2017;
May 5, 2017, read first time and referred to Committee on Business &
Commerce; May 17, 2017, reported favorably by the following vote:
Yeas 8, Nays 0; May 17, 2017, sent to printer.)
Click here to see the committee vote
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.
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