New York Car Loan Laws

What a New York car contract may charge

Article 9 of the Personal Property Law, the Motor Vehicle Retail Instalment Sales Act, governs the retail instalment contract you sign when a dealer arranges financing. Section 303 lets the seller charge the rate or rates agreed with the buyer. It names no percentage, so the APR on your contract is the figure to compare and negotiate.

• Variable rates. A contract may use a variable rate tied to a published index, but the rate may not change more often than once every three months.
• Late charges. A delinquency charge may apply only to a payment at least 10 days late, at the rate the contract states.
• Collection fees. If the contract allows it and an outside attorney collects, attorney fees may not exceed 15% of the amount due, plus court costs.
• Acceleration. The holder may not call the whole balance due arbitrarily when you are not in default.

With no fixed ceiling, an outside offer is your best check on the dealer's rate. Our guide to reading the APR explains what to compare.

Dealer fees and sales tax in New York

If the dealer charges either fee, every copy of the invoice must call it an optional dealer fee and state that it is not a New York State or DMV fee. Unless a lien is being recorded or the dealer issued plates, you may file the application yourself at a DMV office.

• Sales tax. The state rate is 4%, and you also pay the local sales or use tax for where you live. The dealer collects it, or you pay at the DMV when you register a private purchase.
• Trade-in. The taxable receipt excludes credit for property taken in part payment and meant for resale, so your trade-in reduces the taxed amount.
• Add-ons. A service contract or GAP waiver is optional, and financing it adds interest.

What happens if you fall behind in New York

No New York statute gives car buyers a notice and a fixed period to catch up before repossession. Once you default under the contract, the holder may repossess without going to court, but the contract may not permit an unlawful entry onto your property or a breach of the peace (Personal Property Law §302).

1. 1 Notice of redemption rights. Within 72 hours after a repossession or a voluntary surrender, the holder must deliver or mail a notice of your right to redeem, the amount needed, and how to reach it (§316).
2. 2 Catching up after a repossession. If your only default was missed payments, a contract term that accelerates the debt is void when you make a timely tender of the amount that would redeem the car without acceleration, that is, the past-due payments and allowed costs (§302(13)(g)). This is why we count New York as a right-to-cure state.
3. 3 Notice of sale. Under the Uniform Commercial Code the holder must send notice before selling the car, and you can redeem until it is sold.
4. 4 The deficiency. You owe any shortfall after a proper sale, reduced by part of the unearned finance charge you would have saved by paying off early (§315).

Our guides to repossession and the deficiency balance explain how to check the notice and the figures.

Where to check a lender and complain

A company that buys car contracts from dealers needs a sales finance company license from the Department of Financial Services under Banking Law Article 11-B. Banks and credit unions are exempt and answer to their own regulators. Payday and title-loan rules are on Lendmira's New York page.

Questions people ask