Banking Interpretations


March 8, 2007


Dear Ms. [---]

Re: Sales Finance Company License

Your request, dated January 12, 2007, to the New York State-Banking Department (the "Department"), has been referred to me for response. In your letter you asked whether [---] Auto Finance, Inc. (“Auto Finance”) would be required to be licensed under Article XI-B of the Banking Law, as a Sales Finance Company, if it conducts certain activities in New York.

According to Article XI-B, Section 492 of the Banking Law:

No person, except a bank, savings bank, savings and loan association, trust company, private banker or investment company, organized under the banking law of this state and authorized to accept deposits, or licensed lender conducting business pursuant to the provisions of article nine of this chapter, shall engage in the business of a sales finance company in this state without a license therefor obtained from the superintendent, as provided in this article.

"Sales finance company" is defined by Section 491(7) as:

[A] person engaged, in whole or in part, directly or indirectly, in the business of purchasing or otherwise acquiring retail instalment contracts, obligations or credit agreements made by and between other parties, or any interest therein.

In your request you stated that the proposed "regional sales office will employ a staff of Dealer Relationship Managers whose primary responsibilities will be:

  1. Making calls on auto dealers in order to develop new and/or better relationships;
  2. Monitoring loan approvals and following up with dealers;
  3. Creating strategies for developing and maintaining dealer relationships,"
From the information provided, it seems as though Auto Finance would not be "purchasing or otherwise acquiring" any interest in retail installment contracts, obligations or credit agreements entered into in this state with New York residents and, therefore, the Department would not interpose any objection to Auto Finance conducting the proposed activity without first obtaining a license under Article XI-B.

I trust the foregoing is responsive to your inquiry.

Very truly yours,

Harry C. Goberdhan
Assistant Counsel