HOUSE BILL REPORT

                 SHB 2054

                    As Passed Legislature

Title:  An act relating to the financing of goods by sellers of the goods.

Brief Description:  Regulating sellers who finance the goods they sell.

Sponsors:  By House Committee on Financial Institutions & Insurance (Originally sponsored by Representatives Quall, Benson, Hatfield and Cairnes).

Brief History:

  Committee Activity:

Financial Institutions & Insurance:  2/23/99, 2/25/99 [DPS].

Floor Activity:

Passed House:  3/9/99, 91-0.

Passed Senate:  4/7/99, 43-0.

Passed Legislature.

           Brief Summary of Substitute Bill

$Clarifies disclosures when negative equity on trade-ins is included in the principal of a new retail loan, and makes state law consistent with federal law.

HOUSE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 12 members:  Representatives Benson, Republican Co-Chair; Hatfield, Democratic Co-Chair; Bush, Republican Vice Chair; McIntire, Democratic Vice Chair; Barlean; Cairnes; DeBolt; Keiser; Quall; Santos; Sullivan and Talcott.

  Staff:  Charlie Gavigan (786-7340).

Background:

Retail installment contracts are regulated by state law.  These are transactions between a particular retailer and a consumer, such as a department store or automobile dealer installment contracts.  State law generally requires that retail installment contracts provide certain disclosures, describes the contents of an installment contract, and prohibits certain practices related to installment contracts.  Federal Truth-in-Lending provisions also apply to retail installment contracts.

Summary of Bill:

The principal balance, which basically is the amount borrowed, can include amounts paid by the retailer to pay off a loan on similar goods that are traded in as part of the sale.  The portion of the principal that is used to pay off the loan on a trade-in must be disclosed in the installment contract.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  (Original Bill)  This bill is needed to clarify disclosures in retail installment transactions involving a trade-in that has negative equity and the negative equity is included in the principal of  the retail installment transaction.  This makes state law consistent with federal Truth-in-Lending requirements.

Testimony Against:  None.

Testified:  (In support)  Janet Ramble, Washington State Auto Dealers Association; and Steve Blankenship and Steve Buckner, Ford Motor Company.