New Hampshire Revised Statutes 361-A:8-a – Balloon Payment Loans
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I. The general court recognizes that both borrowers and lenders may wish to have balloon retail installment contracts available as a credit option for the purchase of motor vehicles. The general court also recognizes the potential for confusion or misunderstanding by borrowers of the nature and terms of balloon retail installment contracts, and for misleading lending practices. To this end, the general court hereby authorizes the making of balloon retail installment contracts and authorizes the commissioner to adopt rules pursuant to N.H. Rev. Stat. Chapter 541-A to protect borrowers from misleading lending practices.
II. Notwithstanding the provisions of N.H. Rev. Stat. § 361-A:8, III, a retail installment contract for a new motor vehicle may provide for a balloon payment.
III. (a) Balloon contracts shall contain a provision requiring the lienholder to accept return of the motor vehicle that secures the balloon loan, without penalty or additional cost, payment, or expense, to the retail buyer in satisfaction of the balloon payment due under the balloon contract.
(b) Collection of any amounts due under the terms of the balloon contract that have accrued during the period of the contract that precedes the balloon payment due date shall not violate the provision contained in subparagraph (a).
(c) If the balloon contract so provides, a disposition fee may be charged to the retail buyer, provided such fee does not exceed $250, or such greater or lesser amount announced by the commissioner to annually adjust the disposition fee based upon changes in the consumer price index for all urban consumers, all items category, of consumer prices compiled and reported by the U.S. Department of Labor, Bureau of Labor Statistics.
(d) Any cost to the retail buyer associated with the return of a motor vehicle under a balloon contract pursuant to this paragraph shall not exceed the total of the disposition fee, excess mileage fee, excess wear and tear fee, if any, and any accrued amounts due in accordance with subparagraph (b).
IV. The commissioner shall adopt rules, pursuant to RSA 541-A, to implement the purpose and requirements of this section, including, but not limited to, balloon contract disclosures and balloon payment refinancing disclosures. Any disclosures required by rules adopted by the commissioner pursuant to this paragraph shall be in addition to disclosures required by the federal Consumer Credit Protection Act, as amended (15 U.S.C. § 1601 et seq.).
V. Balloon retail installment contracts shall contain a provision that affords retail buyers the option to refinance the balloon payment at an annual percentage rate no greater than the annual percentage rate under the balloon contract. Creditors under this paragraph shall be entitled to deny a refinance request if the retail buyer would not have been eligible for the balloon contract, based on credit history or other credit underwriting standards established by written policy of the creditor. The creditor’s credit underwriting standards for refinancing a balloon payment shall be substantially identical to the underwriting standards used by the creditor when the creditor issued a commitment to the borrower to fund the original balloon retail installment contract. Refinancing of balloon payments shall be subject to the requirements of this chapter. The contract evidencing such refinancing shall be deemed a retail installment contract. An estimate of the monthly payment amount for a refinanced balloon payment shall be provided in writing by the creditor to the retail buyer upon the buyer’s request. Applications for balloon contracts shall include a notice in at least 10 point bold type that the balloon contract applicant is entitled, upon request, to receive a written estimate of the monthly payment amount for a balloon payment refinancing in accordance with the creditor’s then existing refinance programs prior to entering into a balloon contract.
VI. A sales finance company may charge an excess mileage fee associated with a motor vehicle that is returned to the lienholder pursuant to paragraph III of this section, provided that no such fee shall be charged when the odometer of the motor vehicle securing the balloon contract indicates the vehicle was driven less than the maximum mileage limit set forth in the balloon contract. Any excess mileage charges payable by the retail buyer shall be clearly set forth in the balloon contract.
VII. A lienholder may assess a fee for excess wear and tear associated with a motor vehicle returned pursuant to paragraph III of this section. Any charges for excess wear and tear payable by the retail buyer shall be clearly set forth in the balloon contract.
II. Notwithstanding the provisions of N.H. Rev. Stat. § 361-A:8, III, a retail installment contract for a new motor vehicle may provide for a balloon payment.
Terms Used In New Hampshire Revised Statutes 361-A:8-a
- Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
- balloon contract: means a retail installment contract that contains a balloon payment feature. See New Hampshire Revised Statutes 361-A:1
- Balloon payment: means any retail installment contract repayment option under which:
(a) The retail buyer is required to repay the entire amount of any outstanding balance as of a specified date or at the end of a specified period of time, as determined in accordance with the terms of the retail installment contract pursuant to which the credit is extended;
(b) The aggregate amount of the minimum periodic payments required would not fully amortize such outstanding balance by such date or at the end of such period; and
(c) The balloon payment is at least twice the amount of one periodic installment payment under a payment plan that provides for equal periodic installment payments during the term of the balloon contract that precedes the due date of the final balloon payment. See New Hampshire Revised Statutes 361-A:1 - Balloon retail installment contract: or "balloon contract" means a retail installment contract that contains a balloon payment feature. See New Hampshire Revised Statutes 361-A:1
- buyer: means a person who buys a motor vehicle from a retail seller and who executes a retail installment contract either with the retail seller or with any lender. See New Hampshire Revised Statutes 361-A:1
- Commissioner: means the bank commissioner. See New Hampshire Revised Statutes 361-A:1
- Contract: A legal written agreement that becomes binding when signed.
- contract: means an agreement pursuant to which the title to, the property in, or a lien upon the motor vehicle, which is the subject matter of a retail installment transaction, is retained or taken by a sales finance company indirectly from a retail seller or directly from a retail buyer, as security, in whole or in part, for the retail buyer's obligation. See New Hampshire Revised Statutes 361-A:1
- Department: means the banking department. See New Hampshire Revised Statutes 361-A:1
- Motor vehicle: means any device propelled or drawn by any power other than muscular power, in, upon or by which any person or property is or may be transported or drawn upon a highway, excepting power shovels, road machinery, buses, agricultural machinery, house and boat trailers, all-terrain vehicles, snowmobiles, and similar recreational vehicles designed primarily for off-road use. See New Hampshire Revised Statutes 361-A:1
- Retail buyer: or "buyer" means a person who buys a motor vehicle from a retail seller and who executes a retail installment contract either with the retail seller or with any lender. See New Hampshire Revised Statutes 361-A:1
- Retail installment contract: or "contract" means an agreement pursuant to which the title to, the property in, or a lien upon the motor vehicle, which is the subject matter of a retail installment transaction, is retained or taken by a sales finance company indirectly from a retail seller or directly from a retail buyer, as security, in whole or in part, for the retail buyer's obligation. See New Hampshire Revised Statutes 361-A:1
- Sales finance company: means a person engaged, in whole or in part, directly or indirectly, in the business of providing motor vehicle financing in this state to one or more retail buyers, or in the business of purchasing retail installment contracts from one or more retail sellers. See New Hampshire Revised Statutes 361-A:1
III. (a) Balloon contracts shall contain a provision requiring the lienholder to accept return of the motor vehicle that secures the balloon loan, without penalty or additional cost, payment, or expense, to the retail buyer in satisfaction of the balloon payment due under the balloon contract.
(b) Collection of any amounts due under the terms of the balloon contract that have accrued during the period of the contract that precedes the balloon payment due date shall not violate the provision contained in subparagraph (a).
(c) If the balloon contract so provides, a disposition fee may be charged to the retail buyer, provided such fee does not exceed $250, or such greater or lesser amount announced by the commissioner to annually adjust the disposition fee based upon changes in the consumer price index for all urban consumers, all items category, of consumer prices compiled and reported by the U.S. Department of Labor, Bureau of Labor Statistics.
(d) Any cost to the retail buyer associated with the return of a motor vehicle under a balloon contract pursuant to this paragraph shall not exceed the total of the disposition fee, excess mileage fee, excess wear and tear fee, if any, and any accrued amounts due in accordance with subparagraph (b).
IV. The commissioner shall adopt rules, pursuant to RSA 541-A, to implement the purpose and requirements of this section, including, but not limited to, balloon contract disclosures and balloon payment refinancing disclosures. Any disclosures required by rules adopted by the commissioner pursuant to this paragraph shall be in addition to disclosures required by the federal Consumer Credit Protection Act, as amended (15 U.S.C. § 1601 et seq.).
V. Balloon retail installment contracts shall contain a provision that affords retail buyers the option to refinance the balloon payment at an annual percentage rate no greater than the annual percentage rate under the balloon contract. Creditors under this paragraph shall be entitled to deny a refinance request if the retail buyer would not have been eligible for the balloon contract, based on credit history or other credit underwriting standards established by written policy of the creditor. The creditor’s credit underwriting standards for refinancing a balloon payment shall be substantially identical to the underwriting standards used by the creditor when the creditor issued a commitment to the borrower to fund the original balloon retail installment contract. Refinancing of balloon payments shall be subject to the requirements of this chapter. The contract evidencing such refinancing shall be deemed a retail installment contract. An estimate of the monthly payment amount for a refinanced balloon payment shall be provided in writing by the creditor to the retail buyer upon the buyer’s request. Applications for balloon contracts shall include a notice in at least 10 point bold type that the balloon contract applicant is entitled, upon request, to receive a written estimate of the monthly payment amount for a balloon payment refinancing in accordance with the creditor’s then existing refinance programs prior to entering into a balloon contract.
VI. A sales finance company may charge an excess mileage fee associated with a motor vehicle that is returned to the lienholder pursuant to paragraph III of this section, provided that no such fee shall be charged when the odometer of the motor vehicle securing the balloon contract indicates the vehicle was driven less than the maximum mileage limit set forth in the balloon contract. Any excess mileage charges payable by the retail buyer shall be clearly set forth in the balloon contract.
VII. A lienholder may assess a fee for excess wear and tear associated with a motor vehicle returned pursuant to paragraph III of this section. Any charges for excess wear and tear payable by the retail buyer shall be clearly set forth in the balloon contract.