SENATE BILL REPORT

SB 5948

BYSenators Bottiger and Newhouse

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

Senate Committee on Financial Institutions

Majority Report:  Do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf, Pullen, von Reichbauer.

Senate Hearing Date(s):March 6, 1987

Senate Staff:Stephanie Yates (786-7416)

                  April 14, 1987

AS PASSED SENATE, MARCH 18, 1987

BACKGROUND:

Retail purchases using installment credit may be made under a retail installment contract.  It 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.

Fiscal Note:      none requested

Senate Committee - Testified: Jim Boldt, Washington State Auto Dealers Association

HOUSE AMENDMENTS:

A provision is added which defines a motor vehicle as any device capable of being moved on a public highway and by which any person or property may be transported.  A motor vehicle does not include devices moved by human or animal power or used upon stationary rails or tracks.

An effective date of January 1, 1988 is added.