Frequently Asked Questions Concerning 2024 PA 94

PA 94 amends the Motor Vehicle Sales Finance Act, MCL 492.101 et seq., to allow for unequal payment repayment plans in certain installment sale contracts subject to specific requirements.

The substantive amendments in PA 94 apply to installment sellers of new motor vehicles.  PA 94 permits installment sellers of new motor vehicles to enter into enter installment sale contracts with installment buyers that provide for a series of monthly payments in unequal amounts over the course of the contract.

“Installment seller,” “installment sale contract,” “installment buyer,” and “new motor vehicle” are defined in MCL 492.102 of the Motor Vehicle Sales Finance Act.

PA 94 permits installment sale contracts that provide for a series of monthly payments in unequal amounts over the course of the contract if each of the following conditions are met:

1. The installment sale contract concerns a “new motor vehicle” and not a “used or secondhand motor vehicle”, as those terms are defined by the Public Act.
2. The installment sale contract contains the following notice printed prominently in 12-point type or larger directly below the federal Truth-In-Lending disclosure box:
   “Notice: Customer should review the payment schedule to determine if the contract requires payments in equal amounts.”
   This notice requirement applies to all new motor vehicle installment sale contracts whether the contract contains unequal payment amounts or not.
3. The amount of any payment under the installment sale contract does not increase more than 40% from the amount of the first scheduled payment.
4. The amount of each payment under the installment sale contract does not exceed the installment buyer’s maximum payment threshold, as determined by the installment seller or sales finance company at the time the buyer completes the installment sale contract.
5. The licensee does not charge a fee that is either: (1) based solely on the fact that the installment buyer’s installment sale contract requires payments in unequal amounts instead of equal amounts; or (2) related to the prepayment of all of the unpaid time balance under the installment sale contract due to the resale of the motor vehicle.

PA 94 is effective as of July 23, 2024.

Yes.  The Director issued bulletin no. 2024-24-CF on September 11, 2024.  The bulletin provides guidance to installment sellers concerning how they may comply with the new notice requirement until January 1, 2025, while they use existing forms and revise their contracts.

After passage of PA 94 on July 23, 2024, industry raised concerns related to the implementation of the statutory requirements. The Department issued bulletin no. 2024-24-CF on September 11, 2024, which provides suggested options for addressing these concerns.  Accordingly, if there is a complaint involving an installment sale contract entered into between July 23, 2024, and September 11, 2024, that did not include the notice required under MCL 492.113(2)(j), in the exercise of its supervisory responsibilities, the Department will take into account the issues raised by industry as to compliance during that period.