ASSEMBLY, No. 682
STATE OF NEW JERSEY
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Assemblyman BAGGER
An Act concerning regulation of rent-to-own agreements, and amending and supplementing P.L.1960, c.40.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1960, c.40 (C.17:16C-1) is amended to read as follows:
1. In this act, unless the context otherwise requires, the following words and terms shall have the following meanings:
(a) "Goods" means all chattels personal which are primarily for personal, family or household purposes, including merchandise certificates and coupons to be exchanged for goods or services, having a cash price of [$10,000.00] $50,000 or less, but not including money or other choses in action. Goods shall not include chattels personal sold for commercial or business use.
(b) "Retail installment contract" means any contract, other than a retail charge account or an instrument reflecting a sale pursuant thereto, entered into in this State between a retail seller and a retail buyer evidencing an agreement to pay the retail purchase price of goods or services, which are primarily for personal, family or household purposes, or any part thereof, in two or more installments over a period of time. This term includes a security agreement, chattel mortgage, conditional sales contract, or other similar instrument and any contract for the bailment or leasing of goods by which the bailee or lessee agrees to pay as compensation a sum substantially equivalent to or in excess of the value of the goods, and by which it is agreed that the bailee or lessee is bound to become, or has the option of becoming, the owner of such goods upon full compliance with the terms of such retail installment contract whether or not the lessee is obligated to complete the payments on the lease. For the purposes of this subsection, a series of leases is a single lease if: (1) the leases are of the same goods and to the same lessee; and (2) the goods remain in the possession of the lessee. The term “retail installment contract” also includes any contract, or an instrument reflecting a sale pursuant thereto, between a retail seller and a retail buyer which is described as a “rent-to-own,” “rental purchase,” or “hire purchase” or terms of similar import, in the agreement, in any advertisement or in any oral representation in connection with the agreement, regardless of whether the retail buyer saw, heard or relied upon the advertisement or representation.
(c) "Retail seller" means a person who sells or agrees to sell goods or services under a retail installment contract or a retail charge account to a retail buyer, and shall include a motor vehicle installment seller.
(d) "Retail buyer" means a person who buys or agrees to buy goods or services from a retail seller, not for the purpose of resale, pursuant to a retail installment contract or a retail charge account.
(e) "Person" means an individual, partnership, firm, corporation, banking institution, association or any other group of individuals however organized.
(f) "Sales finance company" means and includes any person engaging in this State in the business of acquiring or arranging for the acquisition of retail installment contracts or obligations incurred pursuant to retail charge accounts by purchase, discount, pledge or otherwise from a retail seller which is not wholly owned by or does not wholly own such person, and any person engaging, directly or indirectly, in the business of soliciting the purchase of retail installment contracts or obligations incurred pursuant to retail charge accounts from a retail seller which is not wholly owned by or does not wholly own such person, or in the business of aiding the retail seller in selling, assigning or arranging for the sale or assignment of retail installment contracts or obligations incurred pursuant to retail charge accounts, and any person other than a retail seller who enters into a retail charge account with a retail buyer.
(g) "Motor vehicle" includes all vehicles used for transportation upon a highway propelled otherwise than by muscular power, excepting such vehicles as run only upon rails or tracks.
(h) "Motor vehicle installment seller" means a dealer in motor vehicles, who is required to be licensed under chapter 10 of Title 39 of the Revised Statutes and who sells or offers to sell a motor vehicle to a retail buyer under a retail installment contract.
(i) "Cash price" means the minimum price for which the goods or services subject to a retail installment contract or a retail charge account or other goods or services of like kind and quality may be purchased for cash from the seller by the buyer, as stated in the retail installment contract, the retail charge account or an instrument reflecting a sale pursuant thereto.
(j) "Down payment" means all payments made in cash or in goods or partly in cash and partly in goods, received by the retail seller prior to or substantially contemporaneous with either the execution of the retail installment contract or the delivery of the goods, whichever occurs later.
(k) "Official fees" means the filing or other fees required by law to be paid to a public officer to perfect an interest or lien, on the goods, retained or taken by a retail seller under a retail installment contract and motor vehicle license and transfer fees paid to the State.
(l) "Time price differential" means the amount or amounts, however denominated or computed, in addition to the cash price or prices, to be paid by the retail buyer for the privilege of purchasing goods or services pursuant to a retail installment contract or a retail charge account. The term does not include the amount, if a separate charge is made therefor, for insurance and official fees. As it applies to a lease which is a retail installment contract, the time price differential means the total amount the retail purchaser could pay for the goods or services over the maximum period the lease could run under its terms, including all renewals, less the cash price.
(m) "Holder" means any person, including a retail seller, who is entitled to the rights of a retail seller under a retail installment contract or retail charge account.
(n) "Banking institution" means any bank, national banking association, savings bank, or Federally chartered savings bank authorized to do business in this State, and for the purposes of this act only, an association as defined in section 5 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-5).
(o) "Commissioner" means the Commissioner of Banking of New Jersey and includes his deputies or any salaried employee of the Department of Banking named or appointed by the said commissioner to perform any function in the administration or enforcement of this act.
(p) "Payment-period" means the period of time scheduled by a retail installment contract to elapse between the days upon which installment payments are scheduled to be made on such contract; except that, when installment payments are scheduled to be omitted, pursuant to section 26, "payment-period" means the period of time scheduled by the contract to elapse between the days upon which installment payments are scheduled to be made during that portion of the contract period in which no installment payment is scheduled to be omitted.
(q) "Contract period" means the period beginning on the date of a retail installment contract and ending on the date scheduled by the contract for the payment of the final installment.
(r) "Retail charge account" means any account, other than a retail installment contract or a home repair contract which is subject to the "Home Repair Financing Act," [(P.L.1960, c. 41; C.17:16C-62 et seq.)] P.L.1960, c.41 (C.17:16C-62 et seq.), established by an agreement which prescribes the terms under which a retail buyer may from time to time purchase or lease goods or services which are primarily for personal, family or household purposes, and under which the unpaid balance thereunder, whenever incurred, is payable in one or more installments and under which a time price differential may be added in each billing period as provided herein. Retail charge account also includes all accounts arising out of the utilization by the holder of a credit card, letter of credit or other credit identification issued by a sales finance company, giving the holder the privilege of using the credit card, letter of credit or other credit identification to become a retail buyer in transactions out of which debt arises: (1) by the sales finance company's payment or agreement to pay the retail buyer's obligations; or (2) by the sales finance company's purchase from the retail seller of the obligations of the user of the credit card, letter of credit or other credit identification as a retail buyer.
(s) "Services" means and includes work, labor and services, professional and otherwise which are primarily for personal, family or household purposes but does not include services which are subject to the "Home Repair Financing Act," and insurance premiums financing which is subject to the "Insurance Premium Finance Company Act," [ (P.L.1968, c.221; C.17:16D-1 et seq.)] P.L.1968, c.221 (C.17:16D-1 et seq.).
(t) "Billing period" means the time interval between regular periodic billing statement dates. In the case of monthly billing periods, such intervals shall be considered equal intervals of time if the billing date of a billing period does not vary more than 4 days from the billing date of the immediately preceding billing period. In the case of billing periods which are not monthly, the permissible variation in billing dates shall be that proportion of 4 days (adjusted to the nearest whole number) which the number of days in the billing period bears to 30.
(u) "Professional services" means services rendered or performed by a person authorized by law to practice a recognized profession whose practice is regulated by law and the performance of which services requires knowledge of an advanced type in a field of learning acquired by a prolonged formal course of specialized instruction and study as distinguished from general academic instruction or apprenticeship and training.
(cf: P.L.1981, c.102, s.1).
2. (New section) Except as otherwise provided by law, the time price differential, whether denominated as interest or otherwise, shall not exceed a rate of 30% per annum.
3. This act shall take effect immediately.
STATEMENT
This bill would clarify that rent-to-own lease transactions are subject to the provisions of the “Retail Installment Sales Act of 1960,” P.L.1960, c.40 (C.17:16C-1 et seq.), by including such transactions under the definition of a retail installment contract and by defining a time price differential in a lease transaction which is a retail installment contract to mean the total amount the retail purchaser could pay for the goods or services over the maximum period the lease could run under its terms, including all renewals, less the cash price. The bill also prohibits a “time-price differential” in excess of 30% per annum. This limitation is the same as that contained in the criminal usury statutes which prohibit interest rates exceeding 30 percent per year.
Rent-to-own leases, usually weekly installment agreements, are represented as an alternative method of enabling low- and moderate-income consumers, especially those who do not have access to normal credit sale channels, to obtain appliances and other major household goods. In most rent-to-own leases, the consumer agrees to a series of weekly installment payments. During the term of those installments, the consumer is a lessee; upon fulfilling the terms of the lease, the consumer become the owner of the product.
Provides for the regulation of rent-to-own lease transactions under the “Retail Installment Sales Act of 1960.”