Michigan Laws 492.113 – Installment sale contract; contents; collateral security; notice of legal rights; liability
Current as of: 2023 | Check for updates
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Terms Used In Michigan Laws 492.113
- Administrator: means the director of the department of insurance and financial services. See Michigan Laws 492.102
- buyer: means a person that buys, hires, or leases a motor vehicle for personal, family, or household use, and not for commercial, business, or agricultural use, under an installment sale contract or a legal successor in interest to that person. See Michigan Laws 492.102
- Cash price: means the price measured in dollars at which a seller of a motor vehicle would in good faith sell to the buyer or to any other buyer under like circumstances, and the buyer would in good faith buy from the seller, the motor vehicle that is the subject matter of an installment sale contract if the sale were a sale for cash instead of an installment sale. See Michigan Laws 492.102
- Collateral security: means security, other than a security interest in a motor vehicle that is the subject of an installment sale contract, that is given to secure performance of an obligation of the buyer, or of any surety or guarantor for the buyer, under an installment sale contract. See Michigan Laws 492.102
- contract: means an agreement for the retail sale of a motor vehicle, or that has a similar purpose or effect, under which part or all of the price is payable in 2 or more scheduled payments subsequent to the making of the agreement or under which the obligor undertakes to make 2 or more scheduled payments or deposits that can be used to pay part or all of the purchase price, whether or not the seller has retained a security interest in the motor vehicle or has taken collateral security for the buyer's obligation, and any extension, deferment, renewal, or other revision of that agreement. See Michigan Laws 492.102
- Contract: A legal written agreement that becomes binding when signed.
- Down payment: means all partial payments, whether made in cash or otherwise, received by or for the benefit of the seller before or substantially contemporaneous with either the execution of the installment sale contract or the delivery of the motor vehicle sold under that contract, whichever occurs later. See Michigan Laws 492.102
- Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
- Finance charge: means that term as defined in section 106 of the truth in lending act, 15 USC 1605. See Michigan Laws 492.102
- Holder: means a seller or other person that is currently entitled to the rights of a seller under an installment sale contract. See Michigan Laws 492.102
- Motor vehicle: means a self-propelled device by which a person or property may be transported upon a public highway or, subject to subparagraph (iv), a recreational vehicle. See Michigan Laws 492.102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Principal amount financed: means the unpaid cash price balance after deducting the down payment, adding the cost of any insurance premiums required or obtained as security for or by reason of the sale of a motor vehicle under an installment sale contract, and adding other costs necessary or incidental to the sale of the motor vehicle under the contract that the seller contracts to pay on behalf of the buyer and for the amount of which the seller agrees to extend credit to the buyer and for which the buyer contracts voluntarily. See Michigan Laws 492.102
- seller: means a person engaged in the business of selling, offering for sale, hiring, or leasing motor vehicles under installment sale contracts or a legal successor in interest to that person. See Michigan Laws 492.102
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
- Time balance: means the sum of the principal amount financed and the finance charge. See Michigan Laws 492.102
- Truth in Lending Act: The Truth in Lending Act is a federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on Source: OCC
- United States: shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) An installment sale contract shall include the full names and addresses of all the parties to the contract, the date when signed by the buyer, and a description of the motor vehicle sold that is sufficient for accurate identification.
(2) An installment sale contract shall set forth all of the following separate items in the following order:
(a) The cash price of the motor vehicle. This amount shall include any taxes, the cash price of agreed upon accessories and installation of the accessories, the cash price of any extended warranty or service contract, and a documentary preparation fee. The documentary preparation fee shall not exceed 5% of the cash price of the motor vehicle or $160.00, whichever is less. Beginning on January 1, 2005, the administrator shall adjust the maximum amount then in effect for the documentary preparation fee described in this subdivision every 2 years to reflect the cumulative percentage change in the consumer price index for the 2 immediately preceding calendar years, as determined by the administrator. The administrator shall round the adjustment to the nearest $10.00 increment to set the fee every 2 years under this subdivision, but shall carry over and use the absolute value to calculate the next 2-year adjustment. As used in this subdivision, “consumer price index” means the United States consumer price index for all urban consumers, U.S. city average, as defined and reported by the United States department of labor, bureau of labor statistics.
(b) The down payment made by the buyer at the time of or before execution of the contract, indicating whether made in cash, represented by the agreed value of a trade-in motor vehicle or other goods, or both. The amount of cash and the value of any trade-in shall be stated separately. A description that is sufficient for identification of any trade-in shall be included.
(c) The unpaid cash price balance, which is the difference between the cash price under subdivision (a) and the down payment under subdivision (b).
(d) The cost of any insurance premium or travel emergency benefits pertaining to the operation of the automobile that the seller agrees to extend credit to the buyer to obtain. The installment sale contract shall set forth the term of the insurance and a concise description of the terms of the insurance policy and the travel emergency benefits. If the precise cost of the insurance is not available at the time the contract is signed, an estimated amount, ascertained from the current published applicable manual of a recognized standard insurance rating bureau, may be set forth in the contract. Within 25 days after making the installment sale contract, the seller shall mail or cause to be mailed to the buyer at his or her address as shown on the contract a certificate or policy of insurance and a statement showing the exact cost of the insurance. Each installment sale contract shall contain the following warning, printed prominently in red ink and in 12-point type or larger, directly preceding the notice provided for in section 12(d), enclosed by a continuous heavy line:
| ________________________________________________________ |
| Warning:The insurance afforded hereunder does not cover |
| liability for injury to persons or damage to property of |
| others unless so indicated hereon. |
| ________________________________________________________ |
(e) The cost of any guaranteed asset protection waiver that the seller agrees to extend credit to the buyer to obtain. For purposes of this subdivision, all of the following apply:
(i) “Guaranteed asset protection waiver” means that term as defined in section 3 of the guaranteed asset protection waiver act.
(ii) A guaranteed asset protection waiver may be included as part of, or as an addendum to, an installment sale contract.
(iii) An installment seller that offers, sells, or provides guaranteed asset protection waivers to installment buyers in this state must comply with the guaranteed asset protection waiver act.
(iv) Any cost to an installment buyer for a guaranteed asset protection waiver entered into in compliance with the truth in lending act, 15 USC 1601 to 1667f, and the regulations promulgated under that act, 12 C.F.R. part 226, must be separately stated and is not considered a finance charge or interest.
(f) Other necessary or incidental costs that the seller contracts to pay on behalf of the buyer and for the amount of which the seller agrees to extend credit to the buyer as authorized under this act. The contract shall contain an itemization of the nature and amount of the costs.
(g) The principal amount financed, which is the total of the amounts described in subdivisions (c), (d), (e), and (f).
(h) The finance charge, which is the consideration in excess of the total of the cash price under subdivision (a), excluding the amounts described in subdivisions (d), (e), and (f).
(i) The time balance, which is the total of the amounts described in subdivisions (g) and (h) and represents the total obligation of the buyer that he or she agrees to pay in 2 or more scheduled payments.
(j) The payment schedule, which shall include the number of payments, the amount of the payments, and the time of the payments required to liquidate the time balance.
(3) An installment sale contract shall state clearly any collateral security given to secure the buyer’s obligation under the contract.
(4) An installment sale contract shall contain a summary notice of the buyer’s principal legal rights respecting prepayment of the contract and rebate of the finance charge and reinstatement of the contract in the event of repossession.
(5) An installment sale contract shall contain specific provisions concerning the buyer’s liability for default charges, repossession, and sale of the motor vehicle in case of default or other breach of contract, and the seller’s or holder‘s rights concerning any collateral security.