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                                         SUBSTITUTE SENATE BILL NO. 5641

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                                                                            C 112 L 89

State of Washington                               51st Legislature                              1989 Regular Session

By Senate Committee on Financial Institutions & Insurance (originally sponsored by Senators von Reichbauer and Moore)

Read first time 2/14/89.

AN ACT Relating to service charges on vessel retail installment contracts; and amending RCW 63.14.130 and 63.14.135.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 13, chapter 236, Laws of 1963 as last amended by section 1, chapter 318, Laws of 1987 and RCW 63.14.130 are each amended to read as follows:

          The service charge shall be inclusive of all charges incident to investigating and making the retail installment contract or charge agreement and for the privilege of making the installment payments thereunder and no other fee, expense or charge whatsoever shall be taken, received, reserved or contracted therefor from the buyer.

          (1) Except as provided in subsections (2) and (3) of this section, the service charge, in a retail installment contract, shall not exceed the highest of the following:

          (a) A rate on outstanding unpaid balances which exceeds six percentage points above the average, rounded to the nearest one-quarter of one percent, of the equivalent coupon issue yields (as published by the Federal Reserve Bank of San Francisco) of the bill rates for twenty-six week  treasury bills for the last market auctions conducted during February, May, August, and November of the year prior to the year in which the retail installment contract is executed; or

          (b) Ten dollars.

          (2) The service charge in a retail installment contract for the purchase of a motor vehicle shall not exceed the highest of the following:

          (a) A rate on outstanding unpaid balances which exceeds six percentage points above the average, rounded to the nearest one-quarter of one percent, of the equivalent coupon issue yield (as published by the Federal Reserve Bank of San Francisco) of the bill rate for twenty-six week treasury bills for the last market auction conducted during February, May, August, or November, as the case may be, prior to the quarter in which the retail installment contract for purchase of the motor vehicle is executed; or

          (b) Ten dollars.

          As used in this subsection, "motor vehicle" means every device capable of being moved upon a public highway and in, upon, or by which any person or property is or may be transported or drawn upon a public highway, except for devices moved by human or animal power or used exclusively upon stationary rails or tracks.

          (3) The service charge in a retail installment contract for the purchase of a vessel shall not exceed the highest of the following:

(a) A rate on outstanding balances which exceeds six percentage points above the average, rounded to the nearest one-quarter of one percent, of the equivalent coupon issue yield, as published by the federal reserve bank of San Francisco, of the bill rate for twenty-six week treasury bills for the last market auction conducted prior to the quarter in which the retail installment contract for purchase of the vessel is expected; or

(b) Ten dollars.

As used in this subsection, "vessel" means any watercraft used or capable of being used as a means of transportation on the water, other than a seaplane.

(4) The service charge in a retail charge agreement, revolving charge agreement, lender credit card agreement, or charge agreement, shall not exceed one and one-half percent per month on the outstanding unpaid balances.  If the service charge so computed is less than one dollar for any month, then one dollar may be charged.

          (((4))) (5) A service charge may be computed on the median amount within a range which does not exceed ten dollars and which is a part of a published schedule of consecutive ranges applied to an outstanding balance, provided the median amount is used in computing the service charge for all balances within such range.

        Sec. 2.  Section 2, chapter 60, Laws of 1986 as amended by section 1, chapter 72, Laws of 1988 and RCW 63.14.135 are each amended to read as follows:

          (1) On or before December 5th of each year the state treasurer shall compute the maximum service charge allowed under a retail installment contract or charge agreement under RCW 63.14.130(1)(a) for the succeeding calendar year.  The treasurer shall file this charge with the state code reviser for publication in the first issue of the Washington State Register for the succeeding calendar year in compliance with RCW 34.08.020.

          (2) On or before the first Wednesday of the last month of each calendar quarter the state treasurer shall compute the maximum service charge allowed for a retail installment contract for the purchase of a motor vehicle or vessel pursuant to RCW 63.14.130(2)(a) and (3)(a) respectively for the succeeding calendar quarter.  The treasurer shall file this charge with the state code reviser for publication in the first issue of the Washington State Register for the succeeding calendar quarter in compliance with RCW 34.08.020.

                                                                                                                           Passed the Senate March 9, 1989.

                                                                                                                                       President of the Senate.

                                                                                                                             Passed the House April 6, 1989.

                                                                                                                                         Speaker of the House.