March 12, 2003
Re: Sales Finance Company Licensing Requirements
Dear Ms. [ ]:
Your January 13, 2003 letter to Deputy Superintendent and Counsel Sara Kelsey has been referred to me for response. In your letter you inquire as to whether a Delaware limited liability company with its principal place of business in New York would be subject to the licensing requirements of Article 11-B of the New York State Banking Law (the "Banking Law") if it purchases "automobile dealer paper" from a finance company that acquired the paper from the originating dealer. The short answer to your inquiry appears to be - it depends.
Section 492 of the Banking Law requires that any person engaged in the business of a "sales finance company" in New York, with certain enumerated exceptions, must be licensed in accordance with that section. A "sales finance company" is defined in §491(7) to mean a person engaged, in whole or in part, directly or indirectly, in the business of purchasing or otherwise acquiring retail installment contracts, obligations or credit agreements made by and between other parties, or any interest therein. The retail installment contracts, obligations or credit agreements covered by this definition are those entered into in the State of New York. Your January 13 letter states that the LLC would purchase "automobile dealer paper" that has been originated in various states. If New York is one of those states, it would appear that the LLC would be required to be licensed as a sales finance company in the State of New York, unless the LLC is one of the enumerated entities referred to in §492 of the Banking Law.
I trust that this letter is responsive to your inquiry.
Very truly yours,
Jacquelyn A. Hart