CHAPTER 543
S.P. 602 - L.D. 1638
An Act To Amend the Maine Consumer Credit Code Regarding Balloon Payments
Emergency preamble. Whereas, Acts of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, current Maine law prohibits automobile dealers from offering consumers a motor vehicle loan involving a final balloon payment unless the term of the loan is for a minimum period of 4 years; and
Whereas, this statutory provision puts Maine automobile dealers at a competitive disadvantage and limits the financing options that dealers can make available to consumers; and
Whereas, this legislation would allow Maine automobile dealers to offer financing options with balloon payments for terms of less than 4 years if the contract contains adequate protections for Maine consumers, including the right to return the vehicle in lieu of the final payment; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 9-A MRSA §3-308, sub-§4, as amended by PL 1997, c. 94, §2, is further amended to read:
4. A schedule of payments may require a final payment not substantially equal to all other periodic payments if the transaction is made for a term of not less than 4 years and if the contract evidencing the consumer credit transaction gives the consumer the right to refinance the amount of the final payment in order to fully amortize the obligation on terms then generally offered by the creditor, if the consumer satisfies reasonable credit standards and if the property satisfies reasonable loan to value loan-to-value standards. The administrator shall examine the reasonableness of standards during regular examinations and upon consumer complaint. At least 60 days but not more than 180 days prior to the maturity of the loan, the creditor must notify the consumer in writing of the maturity date and the amount due on the maturity date; and. The 4-year limitation does not apply to a consumer credit transaction secured by a motor vehicle if the contract evidencing the transaction otherwise conforms to the requirements of this section and also permits the consumer to transfer the motor vehicle to the creditor in lieu of making the final payment without further liability, except that the contract may provide for the assessment against the consumer of one or more of the following:
A. A reasonable disposition fee;
B. Reasonable charges for excess mileage;
C. Reasonable charges for excess wear and tear; and
D. Reasonable charges for damage to the motor vehicle; and
Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.
Effective March 10, 2004.
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