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Committee debates allowing uneven auto-loan payment schedules; members split on 36% cap
Summary
The committee reviewed language for consumer credit transactions secured by new vehicles that would allow uneven payment schedules where no payment exceeds another by more than 36%; members questioned the consumer risk and competitiveness implications and asked credit unions to continue research.
The Health Coverage, Insurance and Financial Services committee discussed proposed language clarifying consumer credit transactions secured by new vehicles and a provision permitting payment schedules in which no payment is more than 36% greater than any other payment.
Committee staff explained the amendment would apply to consumer credit transactions secured by an automobile that has not previously been owned or titled by a consumer and noted a schedule-of-payments rule in which no payment is more than 36% greater than any other payment. Representative Matson and others said 36% felt high and suggested lowering the cap to 20% to reduce consumer risk; Representative Matson raised an example showing the larger payment could mean an extra $216 per month on a $600 payment schedule.
Opponents of lowering the cap, including Representative Bob Foley, argued a lower threshold could disadvantage in‑state dealerships relative to neighboring states and noted New Hampshire’s 50% limit was higher. Supporters of the 36% threshold said the option would be available only after a borrower had been qualified for the full loan amount and would provide additional payment flexibility rather than replace standard loan structures.
Committee staff said credit unions requested additional time to analyze the language and would share findings with members; the committee postponed any final vote. Members agreed to continue consideration after receiving feedback from lenders and stakeholders.
Next steps: staff will incorporate credit-union feedback and the committee may revisit the percentage cap; no final committee vote was recorded in the work session.
