Banking Interpretations

NYSBL 491(7) and 492

August 12, 2005

Mr. Jordan Hidalgo
DBA/Blackjack Auto Sales
4954 Rt. 17M
New Hampton, New York 10958

Re: Licensing Requirements

Dear Mr. Hildalgo:

Your July 15, 2005 letter to the New York State Banking Department has been forwarded to me for reply.

In this letter, you ask whether you would need to be licensed by the Banking Department in order for your used car dealership to finance automobiles to customers without charging them interest (zero percent interest rate) or an interest rate of 15%.

Under Article 11-B of the Banking Law, Section 491(7), a "sales finance company" license is required for a retail seller of motor vehicles engaged in whole or in part, in the business of holding retail installment contracts acquired from retail buyers, which have aggregate unpaid time balances of $25,000 or more at any one time.... The answer to your question is that if your company provides financing to customers for balances of $25,000 or more it will require a sales finance company license, if the balances are under $25,000 then it will not require a license. "Interest" is deemed to be a credit service charge as defined in Article 9 (Motor Vehicle Installment Sales) of the New York Personal Property law. The requirement of a license is not determined by whether interest is charged or the percentage of interest charged. It is determined by the amount of the balance being financed.

I trust that this answers your question. If your company will finance automobiles to customers for balances of $25,000 or more it is highly recommended that you contact the State of New York Banking Department Licensed Financial Services Division at (212) 709-5500 to obtain information on becoming a sales finance company in New York State and an application package for such a license. You can also consult our website, for application information.

Should you have any other questions, please feel free to contact me at the above address.


Christine M. Tomczak
Assistant Counsel