We recently received word that some changes have been made to the LAW 553 Retail Installment Sale Contract. For some of you, this news may have already been delivered by your captive lenders. In fact, we have heard that some of these lenders will start accepting the new 553 beginning August 1st. Many of these lenders have also informed that they will require exclusive use of the new 553 by the middle of August. We have highlighted some of these new changes to the 553 below. Although these changes are relatively minor, they will require some reprogramming, and we advise dealers to start looking into this.
Changes to the 553
- Removed the Dealer Number, Contract Number, ROS Number, Stock Number fields from the top of the contract
- Modified the spacing in certain areas of the contract to allow for easier programming.
- Added some additional wording in the Statement of Insurance box right above the signature lines related to physical damage insurance.
- In the Federal Truth In Lending Disclosures box, modified the payment schedule section by removing “monthly beginning” and adding a blank space the “When Payments Are Due” column. Also, added a “$” to the boxes in “Amount of Payments” column.
- Made the following changes in the Itemization of the Amount Financed section:
- Made the total lines longer.
- Changed the format of the “Other (Nontaxable)” line. Specifically, in new version, the line is split into two lines, 1.A.3. and 1.A.4.
- Created a second “Prior Credit or Lease Balance” line (labeled as line 1.K.). Relabeled the proceeding lines accordingly.
- Changed the format of the “Other paid to…” lines (now labeled as lines 1.N and 1.O).
- Condensed the “Amount Paid to Insurance Companies” line (line 3) into one line rather than two.
- Removed “(indicate if negative number)” language from line 6.C.
- Added two more “Other” lines in the Total Downpayment section as 6.G. and 6.H., and relabeled the “Cash, Cash Equivalent, Check, Credit Card, or Debit Card” line as 6.I.
- Made the Blank Box smaller.
- Added lines for the Buyer and Co-Buyer to print their names below their respective signature lines.
- Added lines below the Buyer and Co-Buyer Signature and Printed Name for the name and title for Business Use transactions.
There were also some relatively minor changes made to the language on the back of the 553.
- In section 1.b., “as the law allows” was added to the end of the section directly after the word “choose.”
- In section 2.d., the sentence “You agree to name us on your insurance policy as loss payee” was added as the new third sentence in the section.
- In section 3.b., in the second bullet point regarding credit application, changed “on a” to “during.”
- In section 3.d., deleted the words “at your expense” from the second to last sentence and added “(such as GPS)” to the third sentence.
- In section 6 “SERVICING AND COLLECTION CONTACTS”, added/changed language.
- In section 8 “WARRANTIES OF BUYER”, changed “in” to “during” in the first sentence of the section.
- Modified language in the “ARBITRATION PROVISION.”
- Changed format of the Assignment Box at the very end.
If you have any questions regarding this, or any other situation that may arise in your sales or service departments, hotline clients are invited to contact us at (800) 785-2880 (then press “4” for hotline) or email@example.com.