Does Mississippi's 28.75% cap on used-vehicle retail installment contracts override the 59% APR allowed under the Consumer Alternative Installment Loan Act?
Plain-English summary
A Harrison County Justice Court judge asked whether the lower 28.75% APR cap on retail installment contracts for used vehicles (Section 63-19-43, "Class 4" used vehicles more than four years old) controls when the financing is also under $4,000, where the Consumer Alternative Installment Loan Act allows up to 59% APR (Section 75-67-181).
The AG concluded there's no conflict between the two statutes because they govern different transaction types:
- Section 63-19-43 applies to retail installment contracts under the Motor Vehicle Sales Finance Law. A retail installment contract is an agreement where the title or a lien on the motor vehicle secures the buyer's obligation. This is the dealer-financing structure.
- Section 75-67-181 applies to consumer installment loans of $4,000 or less from licensees under the Small Loan Regulatory Law and Small Loan Privilege Tax Law. The loan can be used for any purpose (including buying a vehicle) but the loan structure is different from a retail installment contract.
So the right question for a court isn't "which statute controls?" — it's "what kind of transaction is this?" If the dealer financed the sale and took a security interest in the vehicle, it's Section 63-19-43 (with its 28.75% cap). If a small-loan licensee made a consumer loan that the borrower then used to pay for the vehicle, it's Section 75-67-181 (59% cap allowed).
A footnote also notes that small-loan rates set in Section 75-17-21 control all loans by small-loan lenders, regardless of purpose, citing the 1996 Napier opinion.
What this means for you
For justice court judges and trial judges hearing usury or finance-charge disputes
Don't try to reconcile the two statutes by picking one as more specific. Both are specific, just to different transaction structures. Walk the analysis:
- Was this a retail installment contract (dealer kept the title or took a lien on the vehicle)? If yes: Section 63-19-43 applies. For used vehicles older than four years (Class 4), the cap is 28.75%.
- Was this a consumer installment loan from a licensed small-loan lender? If yes: Section 75-67-181 applies, with a 59% cap on loans of $4,000 or less.
- The transaction can be either, but it's only one. The documents and the licensee's status (small-loan license? dealer with retail installment authority?) determine which.
The factual record matters. Promissory note vs. retail installment contract vs. dealer financing agreement — the form drives the analysis.
For consumer finance lawyers
Confirm the licensure status of the lender. A motor vehicle dealer or sales finance company under Sections 63-19-3 and 63-19-7 is operating under the retail installment contract regime. A small-loan licensee under Sections 75-67-101 et seq. or 75-67-201 et seq. is operating under the consumer-loan regime.
If the same entity holds both licenses (some do), the documentation determines which transaction type applies.
For challenges to finance charges:
- Section 63-19-43 violations: void or voidable retail installment contract; potential statutory damages
- Section 75-67-181 violations: small-loan-act remedies; consult licensure regulator (Department of Banking and Consumer Finance)
For motor vehicle dealers
Stick within the Section 63-19-43 caps for retail installment contracts. Class 4 (used vehicles more than four years old) caps at 28.75%. Lower classes have lower caps. Don't try to bridge to Section 75-67-181 rates by recharacterizing the deal — the security interest in the vehicle is the giveaway that you're under Section 63-19-43.
If you want to make a consumer loan rather than finance the sale, you'd need a small-loan license, and the documentation would have to reflect that. Hybrid structures invite scrutiny.
For small-loan lenders
You're licensed for consumer installment loans up to certain thresholds. If a borrower uses your loan to buy a vehicle, that's their business; the rate cap you face is Section 75-67-181's 59% (for loans of $4,000 or less) or Section 75-17-21's tiered rates, at your option per the statute.
You don't take a security interest in a specific vehicle the way a dealer does. If you do, you may have shifted into retail-installment-contract territory, which would change the analysis.
For consumer borrowers
If your debt feels too expensive, ask yourself two structural questions:
- Did you sign a retail installment contract at the dealer that gave them title or a lien on the vehicle? If so, the dealer is bound by Section 63-19-43's caps (28.75% for Class 4 used vehicles older than four years).
- Did you take a separate loan from a finance company that you used to pay for the vehicle? If so, Section 75-67-181 governs (up to 59% for loans $4,000 or less).
If you suspect a violation, consumer-credit attorneys and the Mississippi Department of Banking and Consumer Finance can evaluate the documents.
Common questions
Q: What is a "retail installment contract" exactly?
A: An agreement to buy a motor vehicle where the seller retains title or takes a lien on the vehicle to secure the buyer's payment obligation. Section 63-19-3(g). The dealer or its assignee is the creditor. The vehicle itself is collateral.
Q: What is a "consumer installment loan"?
A: A loan from a small-loan licensee to an individual borrower, typically secured by something other than a specific vehicle (or unsecured). The borrower can use the proceeds for whatever they want, including paying cash for a vehicle.
Q: What's the difference between Section 75-17-21 and Section 75-67-181?
A: Section 75-17-21 sets tiered rates for small-loan lender loans (e.g., 24% per annum for the portion above $2,500 up to $5,000). Section 75-67-181 is an alternative cap of 59% per annum for loans of $4,000 or less. The licensee chooses which to use.
Q: What is "Class 4" under Section 63-19-43?
A: Section 63-19-43 categorizes vehicles for finance-charge purposes. Class 4 is "any used motor vehicle not in Class 2 or Class 3 and manufactured more than four (4) years prior to the year in which the sale is made." The cap for Class 4 is 28.75% APR.
Q: What are Class 2 and Class 3?
A: Section 63-19-43 sets different rates for newer vehicles (Class 2: new motor vehicles, lower cap) and somewhat older but not yet "more than four years" used vehicles (Class 3, intermediate cap). The full statute lists each class.
Q: Can a dealer also be a small-loan lender?
A: Possibly, if the dealer or its affiliate holds a small-loan license. But the transaction documents have to be structured as a consumer loan, not a retail installment contract, to use the Section 75-67-181 rates. Mixing the two creates legal risk.
Q: What if the documents are ambiguous?
A: A factual question for the court. The judge looks at the documents, the security interest, the licensure of the creditor, and how the parties treated the transaction.
Q: What about title loans or vehicle-secured short-term loans?
A: Title loans operate under separate statutes (Title Pledge Act, Section 75-67-401 et seq.). The 28.75% / 59% framework here doesn't directly govern title loans.
Background and statutory framework
Mississippi has a layered consumer credit framework:
- Motor Vehicle Sales Finance Law (Section 63-19-1 et seq.): governs retail installment contracts for motor vehicles, with rate caps at Section 63-19-43.
- Small Loan Regulatory Law (Section 75-67-101 et seq.) and Small Loan Privilege Tax Law (Section 75-67-201 et seq.): govern consumer installment loans by licensed small-loan lenders, with rate caps at Section 75-17-21.
- Consumer Alternative Installment Loan Act (Section 75-67-181): provides an alternative rate cap of 59% for loans up to $4,000 by the same small-loan licensees.
Each framework applies to its specific transaction type. The choice between them is structural, not interpretive.
The Mississippi Supreme Court's general rule of statutory construction — "Without ambiguity, the controlling law of this state requires that the Court look no further than the clear language of the statute and apply it" (Forman v. Carter) — applies. The AG found no ambiguity here: the statutes define their scope and don't conflict.
The 1996 Napier opinion confirms that small-loan licensees use Section 75-17-21 rates regardless of loan purpose. So a small-loan licensee making a vehicle-purchase loan uses Section 75-17-21 (or its alternative, Section 75-67-181), not Section 63-19-43.
Citations and references
Statutes:
- Miss. Code Ann. § 63-19-3, definitions (motor vehicle, retail installment contract, retail buyer/seller, sales finance company)
- Miss. Code Ann. § 63-19-7, sales finance company licensing/compliance
- Miss. Code Ann. § 63-19-43, maximum finance charge for retail installment contracts
- Miss. Code Ann. § 75-17-21, small-loan lender rates
- Miss. Code Ann. § 75-67-101 et seq., Small Loan Regulatory Law
- Miss. Code Ann. § 75-67-181, Consumer Alternative Installment Loan Act 59% cap
- Miss. Code Ann. § 75-67-201 et seq., Small Loan Privilege Tax Law
Cases cited:
- Forman v. Carter, 269 So. 2d 865 (Miss. 1972), apply clear statutory language
Prior AG opinions cited:
- MS AG Op., Frierson (Sept. 8, 2017), statutory construction principles
- MS AG Op., Napier (Nov. 15, 1996), small-loan rates control all loans by small-loan lenders regardless of purpose
Source
- Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
- Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2022/03/N.Patano-February-15-2022-Conflict-of-Statutes.pdf
Original opinion text
February 15, 2022
The Honorable Nick Patano
Harrison County Justice Court Judge 5
190 Lameuse Street
Biloxi, Mississippi 39530
Re: Conflict of Statutes
Dear Judge Patano:
The Office of the Attorney General has received your request for an official opinion.
Question Presented
You suggest a conflict exists between Mississippi Code Annotated Section 63-19-43, which limits interest to 28.75% for motor vehicles older than four years, and Section 75-67-181, which, under the Mississippi Consumer Alternative Installment Loan Act, allows up to 59% APR for loans under $4,000.00 for the purchase of any goods. Your question asks: "Would the more specific statute Section 63-19-43 applying only to loans for motor vehicles be controlling, and limit the interest to 28.75% for used vehicles more than four years old and under $4,000?"
Brief Response
It is the opinion of this office that there is no conflict between Sections 63-19-43 and 75-67-181.
Applicable Law and Discussion
Your request suggests a conflict between the two statutes, thus potentially implicating the rules of statutory construction. Such rules of statutory construction are applied only "when a statute is ambiguous, has conflicting provisions within it, or conflicts with another statute." MS AG Op., Frierson at 2 (Sept. 8, 2017) (citation omitted). However, when the language of the statute is clear and there is no ambiguity, the rules of statutory construction need not be applied. Id. "Without ambiguity, the controlling law of this state requires that the Court look no further than the clear language of the statute and apply it." MS AG Op., Frierson at 2 (Sept. 8, 2017) (quoting Forman v. Carter, 269 So. 2d 865 (Miss. 1972) (internal quotations omitted)). In this particular instance, we find no ambiguity or conflict between Sections 63-19-43 and 75-67-181, so we look to the clear language of the statutes to determine their meaning.
Section 63-19-43 is part of the Motor Vehicle Sales Finance Law, which pertains to retail installment contracts, among other things. A retail installment contract is defined as "an agreement entered into in this state pursuant to which the title to or a lien upon the motor vehicle . . . which is the subject of a retail installment transaction is retained or taken . . . as security for the buyer's obligation." Miss. Code Ann. § 63-19-3(g). A retail installment contract includes a conditional sales contract. Id.
Section 63-19-43 is entitled "Maximum Finance Charge" and states, in pertinent part:
(1) The maximum finance charge which may be contracted for or received for any purchase money loan or purchase money extension of credit made by any lender or by any licensed retail seller, or by any other entity that is expressly exempt from licensing but expressly subject to compliance with this chapter under the provisions of 63-19-7, in connection with sales or financing of motor vehicles and commercial vehicles, as defined in Section 63-19-3(a) and 63-19-3(b), made under this chapter, may result in a yield not to exceed the following annual percentage rates calculated according to the actuarial method:
. . .
(d) Class 4. Any used motor vehicle not in Class 2 or Class 3 and manufactured more than four (4) years prior to the year in which the sale is made -- twenty-eight and seventy-five one-hundredths percent (28.75%) per annum on the unpaid balance.
Section 63-19-7 is referenced in Section 63-19-43 and deals specifically with the licensing and compliance of those engaging in the business of a sales finance company. A "sales finance company" is defined as:
[A] person engaged, in whole or in part, in the business of purchasing retail installment contracts from one or more retail sellers. The term includes, but is not limited to, a bank, trust company, private banker, industrial bank or investment company, if so engaged.
Miss. Code Ann. § 63-19-3(k). A "retail seller" is a person (individual, partnership, corporation, association, or other group) "who sells a motor vehicle . . . to a retail buyer under or subject to a retail installment contract." Miss. Code Ann. § 63-19-3(d). A "retail buyer" is a person "who buys a motor vehicle . . . from a retail seller, not for the purpose of resale, and who executes a retail installment contract." Miss. Code Ann. § 63-19-3(c).
The second statute you ask about regarding financing of a motor vehicle is Section 75-67-181, which is part of the Mississippi Consumer Alternative Installment Act, and states:
In lieu of the interest and charges in Section 75-17-21, on loans of Four Thousand Dollars ($4,000.00) or less, a licensee may contract and charge a monthly finance charge not to exceed an annual percentage rate, calculated according to the actuarial method, of fifty-nine percent (59%) per annum on the unpaid balance of the amount financed.
Section 75-17-21 states:
For any consumer installment loan that a licensee under the Small Loan Regulatory Law and the Small Loan Privilege Tax Law makes, the licensee has the option to either lend at the rates and fees under this section or at the rates and charges authorized under Section 75-67-181. Except as provided in Section 75-67-181, but notwithstanding any other provision of law to the contrary, the maximum finance charge which may be contracted for and received for any loan or extension of credit made by a licensee under the Small Loan Regulatory Law (Section 75-67-101 et seq.) and the Small Loan Privilege Tax Law (Section 75-67-201 et seq.) may result in a yield not to exceed the following annual percentage rates calculated according to the actuarial method:
. . .
(c) Twenty-four percent (24%) per annum for the portion of the unpaid balance of the amount financed in excess of Two Thousand Five Hundred Dollars ($2,500.00) but not greater than Five Thousand Dollars ($5,000.00).
(Emphasis added).
The two statutes you inquire about pertain to two different types of financing, both of which can be applied to motor vehicles. Section 63-19-43 pertains to retail installment contracts for motor vehicles while Section 75-67-181 pertains to consumer installment loans, regardless of the loan's purpose. In order to determine which statute pertains to the motor vehicle in your particular question, the facts surrounding its purchase and financing must be determined and the appropriate statute applied.
If this office may be of any further assistance to you, please do not hesitate to contact us.
Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Misty Monroe
Misty Monroe
Special Assistant Attorney General
Footnote: Unlike Section 63-19-43, Section 75-67-181 does not limit the subject of the loan to motor vehicles or commercial vehicles, but a motor vehicle could be financed under its terms. See MS AG Op., Napier at *1 (Nov. 15, 1996) (stating that rates set forth in Section 75-17-21 control all loans made by small loan lenders regardless of the purpose for which the loan was made).