Motor Vehicle Sales and Finance Act
7.1 Conditional Sales Contracts:
- “Conditional Sales Contracts” are what we commonly refer to
as “finance contracts” or “installment contracts.”
The dealer offers to sell a vehicle for $10,000.00. The buyer agrees to
pay $1000.00 now and pay the dealer the remaining balance of $9,000.00
in regular monthly payments over the next two years, including interest.
- Form and Filing Process:
The dealer and buyer sign the conditional sales contract. The most common
version of the conditional sales contract used in California is the “553”
contract from Law Printing/Reynolds & Reynolds (www.reysource.com).
Another good source for conditional sales contracts and other dealer form
contracts is www.bpiautoforms.com
BPI will also provide you a free catalogue with all of their forms. The
dealer completes the conditional sales contract and processes the Report
of Sale documents as usual. Remember to have the title issued showing
the dealer’s name as the legal owner/lienholder and to have it mailed
to the dealer, not the buyer. The title is the dealer’s security
to insure the buyer makes all the required payments. If the buyer fails
(defaults on the dealer’s loan), then the dealer must repossess
the vehicle. Repossession is discussed in the following section.
- Requirements: All conditional sales contracts,
including any promissory notes or any other evidences
of indebtedness must meet the following criteria:
- Must be in writing. [C.C. §2981.9]
- Must be a single document. [C.C. §2981.9]
- Must be signed by both buyer and seller.
- Must deliver copy to buyer at signing.
- Repossessions must be conducted by the owner of the vehicle to
be repossessed, or a licensed repossession agency. Repossession agencies are
licensed by the Dept. of Consumer Affairs. Employees hired by the repossession
agency must also be registered with the Department of Consumer Affairs. If
you are not certain if the business, or person, you are hiring is a license
to do repossessions, contact the Dept. of Consumer Affairs at 916-322-4000.