California

The relevant statute is the Automobile Sales Finance Act, Cal. Civ. Code §§14:2981 et seq. (“CA-MVRISA”).

A. Actions creditor may take: CA-MVRISA §14:2982.8(a) - If buyer covenants to maintain insurance on the vehicle and buyer fails to maintain or requests creditor to obtain the required insurance, creditor may obtain the required insurance and treat repayment of the amount advanced as set forth below.

B. Notices required:

(1) CA-MVRISA §14:2982.8(b) - Creditor must notify buyer in writing of the amounts advanced by creditor, and buyer's repayment options as follows:

(i) Full payment within 10 days after giving or mailing notice;

(ii) Full amortization during the term of the insurance;

(iii) If offered by creditor, full amortization after the term of the contract; installments not to exceed the average monthly payment under the contract;

(iv) If offered by creditor, a combination of B.(1)(b) and B (1)(iii),, allowing some amortization during the term of the insurance and the remainder of the amortization after the term of the contract, installments not to exceed the average monthly payment under the contract; or

(v) If offered by creditor, any other amortization plan.

(2) CA-MVRISA §14:2982.8(b) - Buyer may either pay the amount advanced in full or give creditor written notice of buyer's choice of the amortization option. If buyer does not respond within 10 days after the date of giving or mailing the notice, creditor may amortize the amount advanced on a secured basis as described in B.(1)(ii), or if offered by creditor, as described in B.(1)(iii) or B.(1)(iv).

(3) CA-MVRISA §14:2982.8(c) - Creditor's notice to buyer must also set forth for each amortization plan:

(i) the amount of additional finance charges;

(ii) the sum of the amount advanced;

(iii) the number of installments required;

(iv) the amount of each installment; and

(v) the date for payment of each installment.

(4) CA-MVRISA §14:2982.8(c) - Creditor's notice to buyer must also contain, in contrasting RED PRINT in at least 8-point bold type, the following:

"WARNING -- IT IS YOUR RESPONSIBILITY UNDER CALIFORNIA LAW TO OBTAIN LIABILITY INSURANCE OR BE SUBJECT TO PENALTIES FOR VIOLATING SECTION 16020 OF THE MOTOR VEHICLE CODE, WHICH MAY INCLUDE LOSS OF LICENSE OR A FINE. THE INSURANCE ACQUIRED BY THE LIENHOLDER DOES NOT PROVIDE LIABILITY COVERAGE AND DOES NOT SATISFY YOUR RESPONSIBILITY UNDER CALIFORNIA LAW."

C. Charges permitted: No express statutory provision.

D. Finance charge allowed on creditor's payment: Yes, at rate previously disclosed to the consumer. CA-MVRISA §14:2982.8(a), (e).

Click here to view relevant California Code and Regulations.