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Texas Retail Installment Contract Forms
| • | Burrell 24-4316 Precompute, Actuarial Method, Sales Tax Deferred (form says "Scheduled Installment Earnings") |
| ▪ | Other form codes for this form: Dealers Choice form 007 |
| • | Burrell 24-4314 Precompute, Actuarial Method, Sales Tax Advanced (form says "Scheduled Installment Earnings") |
| ▪ | Other form codes for this form: Dealers Choice form 013 |
| • | Burrell 24-4321 Simple Interest, Sales Tax Deferred (form says "True Daily Earnings") |
| • | Burrell 24-4318 Simple Interest, Sales Tax Advanced (form says "True Daily Earnings") |
| • | Burrell 24-4312 Precompute, Rule of 78s, Sales Tax Deferred (form says "Sum of Periodic Balances") |
| ▪ | Stay away from this form - requires all sales to be monthly, with 1st payment due in exactly 1 month |
| • | Burrell 24-4310 Precompute, Rule of 78s, Sales Tax Advanced (form says "Sum of Periodic Balances") |
| ▪ | Stay away from this form - requires all sales to be monthly, with 1st payment due in exactly 1 month |
General Information
Add on Rate Information -- The maximum interest rate you can charge is based upon the age of the vehicle sold, and is determined by using a method of figuring interest called the Add-on rate but for irregular sales is effectively determined by using the APR rate. In this system you will always enter an APR rate to calculate your interest.
| 1. | You can effectively use the add-on rate only on "regular" sales. "Regular" sales are sales that have monthly payments, and the first payment is due exactly one month from the sale date. For all other sales, you are limited to charging interest at the same APR rate as a "regular" sale would be for the same period of time. Rather than have you enter Add-On rates for "regular" sales and convert to APR for "irregular" sales we have you enter an APR for all sales. The system will always adjust your APR down to the maximum amount allowed by law, based on the age of the vehicle, and the term of your contract. For example, if you enter an APR of 28% the system will automatically lower it to 26.58% for a five year old vehicle with a payment term of 24 months. The system will always check to be sure you are not over the maximum amount allowed. (Obviously, the system will not adjust your APR up to the maximum allowed, if you want to do a deal at 10% you can do a deal at 10%.) |
| 2. | For BH-PH sales in which you remit your sales taxes to the state on a deferred basis (once a month based on payments received the previous month) you are not allowed to charge interest on sales taxes. However, when you print your contracts the sales tax is included in the "Amount Financed" section creating a second "effective" APR that must be disclosed in the Federal Regulation Z box. You will then have two APR's associated with these deals - One is the APR that you enter and that is used to calculate financing (but not on the sales tax) and the second is the effective APR based on the sales tax being included in the Federal Disclosure box. It is important that you have the first APR to be able to prove that you did not charge interest on the sales tax. |
Subsequent Sales
This applies to dealer-financed (buy-here pay-here) sales only.
If you sell a vehicle more than once in the same calendar year, and your dealership finances both sales, the second sale is known as a 'Subsequent Sale'. For example, if you sell a vehicle on January 3rd, repossess it on May 16th, then sell it again on August 4th of that same year, it will be considered a Subsequent Sale. However, if you sell a vehicle on December 31st, then sell the same vehicle on January 1st, it is not considered a Subsequent Sale. At the bottom of the Inventory Tax Report (Report R-2-6), there is a breakdown of your Inventory Sales, Fleet Sales, Dealer Sales, and Subsequent Sales.
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