By: Thompson of Harris H.B. No. 2339       A BILL TO BE ENTITLED   AN ACT   relating to trade-in credit agreements offered in connection with   certain motor vehicle retail installment contracts.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 348.001, Finance Code, is amended by   adding Subdivision (11) to read as follows:                (11)  "Trade-in credit agreement" means a contractual   arrangement under which a retail seller agrees to provide a   specified amount as a vehicle trade-in credit for diminished value   of that vehicle in the event the vehicle is damaged, but not   rendered a total loss, as a result of a collision accident, with the   credit to be applied to the purchase or lease of a different vehicle   from that retail seller. A trade-in agreement is a separate   agreement from the retail installment contract and is not a term of   the retail installment contract.          SECTION 2.  Section 348.005, Finance Code, is amended to   read as follows:          Sec. 348.005.  ITEMIZED CHARGE. An amount in a retail   installment contract is an itemized charge if the amount is not   included in the cash price and is the amount of:                (1)  fees for registration, certificate of title, and   license and any additional registration fees charged by a full   service deputy under Section 520.008, Transportation Code.                (2)  any taxes;                (3)  fees or charges prescribed by law and connected   with the sale or inspection of the motor vehicle; and                (4)  charges authorized for insurance, service   contracts, warranties, automobile club memberships, trade-in   credit agreements, or a debt cancellation agreement by Subchapter   C.          SECTION 3.  Subchapter B, Chapter 348, Finance Code is   amended by adding Section 348.125 to read as follow:          Sec. 348.125.  TRADE-IN CREDIT AGREEMENT OFFERED IN   CONNECTION WITH RETAIL INSTALLMENT CONTRACT. (a) A retail seller   may, at the time a retail installment contract is executed, offer to   sell to the retail buyer a trade-in credit agreement or similarly   named agreement.          (b)  A trade-in credit agreement is not considered an   insurance product.          (c)  To ensure the faithful performance of a retail seller's   obligations to the retail buyer under a trade-in credit agreement,   the retail seller must be insured under a contractual liability   reimbursement policy approved by the commissioner of insurance,   issued for the benefit of Texas residents.          (d)  In addition to other disclosures required by state or   federal law, the retail seller shall give the retail buyer a copy of   the written trade-in agreement and written notice at the time the   retail installment contract is executed that the retail buyer:                (1)  is not required to purchase the trade-in credit   agreement as a condition for approval of the contract;                (2)  is entitled to cancel the trade-in credit   agreement and receive full refund before the 31st day after the date   the contract is executed;                (3)  is able to terminate the trade-in agreement at any   time after the 30th day after the date the contract is executed and   receive a pro-rata refund less any applicable cancellation fee   which may not exceed $50; and                (4)  has been provided a clear and concise disclosure   as to the amount of the credit available during the term of the   trade-in credit agreement.          (e)  The amount charged for a trade-in credit agreement made   in connection with a retail installment contract may not exceed   five percent of the cash price of the vehicle that is the subject of   the retail installment contract, including any attached   accessories and excluding the price of services related to the   sale, the price of service contracts, taxes, and fees for license,   title, and registration.          (f)  A trade-in credit agreement shall require the retail   buyer to provide proof of insurance settlement documents in order   to obtain a credit. A trade-in credit agreement may not require the   retail buyer to provide any other documentation in order to obtain a   credit.          (g)  If a retail seller enters a trade-in credit agreement   with a retail buyer, then the retail seller must comply with the   terms of the trade-in agreement in connection with the purchase or   lease of a subsequent motor vehicle. A retail seller must provide   any credit required under a trade-in credit agreement at the time of   the purchase or lease of a subsequent motor vehicle.          (h)  The benefit to be provided in connection with a trade-in   credit agreement must bear a reasonable relationship to the amount   charged for the agreement and the amount, term, and conditions of   the retail installment contract.          SECTION 4.  Sections 348.208 (b) and (c), Finance Code, are   amended to read as follows:          (b)  A retail installment contract may include as a separate   charge an amount for:                (1)  motor vehicle property damage or bodily injury   liability insurance;                (2)  mechanical breakdown insurance;                (3)  participation in a motor vehicle theft protection   plan;                (4)  insurance to reimburse the retail buyer for the   amount computed by subtracting the proceeds of the buyer's basic   collision policy on the motor vehicle from the amount owed on the   vehicle if the vehicle has been rendered a total loss;                (5)  a warranty or service contract relating to the   motor vehicle;                (6)  an identity recovery service contract; [or]                (7)  a debt cancellation agreement if the agreement is   included as a term of a retail installment contract under Section   348.124; or                (8)  a trade-in credit agreement.          (c)  Notwithstanding any other law, service contracts,   [and]   debt cancellation agreements, and trade-in credit agreements sold   by a retail seller of a motor vehicle to a retail buyer are not   subject to Chapter 101 or 226, Insurance Code.          SECTION 5.  This Act takes effect September 1, 2017.