HOUSE BILL REPORT

SB 5948

As Amended by the House

BYSenators Bottiger and Newhouse

Revising permissible interest rates on retail installment contracts for the purchase of motor vehicles.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass with amendment.  (11)

      Signed by Representatives Lux, Chair, Zellinsky, Vice Chair; Chandler, Crane, Day, Dellwo, Ferguson, P. King, Meyers, Nutley and Winsley.

House Staff:Harry Reinert (786-7110)

AS PASSED HOUSE APRIL 13, 1987

BACKGROUND:

Retail purchases using installment credit may be made under a retail installment contract.  A retail installment contract is generally entered into for the purchase of a single item or group of items with an established term for completing payments.  Additional purchases may not be added to the contract without the making of a new contract.  The maximum interest rate which may be charged on a retail installment contract is determined by calculating the average of four quarterly auctions of twenty-six week treasury bills for the year prior to the year in which the contract is made.  The maximum interest rate is six percentage points over the average.  The rate stays the same for an entire year.

SUMMARY:

The maximum interest rate that may be charged on a retail installment contract for the purchase of a motor vehicle is based on the auction of twenty-six week treasury bills in the quarter prior to the quarter in which the contract is made.  The maximum interest rate is 6 percent over the treasury bill rate for the prior quarter.  The act takes effect January 1, 1988.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Jim Boldt, Washington Automobile Dealers.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    This bill will allow auto dealers to charge interest rates that are closer to market conditions

House Committee - Testimony Against:      None Presented.