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 hearing finance-charge disputes

The opinion concludes there is "no conflict between Sections 63-19-43 and 75-67-181," so the rules of statutory construction do not come into play. The two statutes "pertain to two different types of financing, both of which can be applied to motor vehicles." Section 63-19-43 governs retail installment contracts for motor vehicles; Section 75-67-181 governs consumer installment loans "regardless of the loan's purpose." The opinion says that to decide which applies "the facts surrounding [the] purchase and financing must be determined and the appropriate statute applied."

For dealers, lenders, and their lawyers

Under the opinion, the dividing line is the transaction structure. A retail installment contract is one where "the title to or a lien upon the motor vehicle . . . is retained or taken . . . as security for the buyer's obligation" (Section 63-19-3(g)); those fall under Section 63-19-43, which caps a Class 4 used vehicle (manufactured more than four years before the sale) at 28.75% per annum. A consumer installment loan by a small-loan licensee falls under Section 75-67-181, which lets the licensee charge up to 59% per annum on loans of $4,000 or less "in lieu of" the rates in Section 75-17-21.

For consumer borrowers

The opinion's framework turns on how the financing was structured, not on which cap is lower. If a dealer financed the purchase and took title or a lien on the vehicle as security, the deal is a retail installment contract under Section 63-19-43. If a licensed small-loan lender made a consumer installment loan that was then used for the vehicle, Section 75-67-181 applies. The opinion treats which one governs as a fact question.

Common questions

Q: Does Section 63-19-43's 28.75% cap override the 59% cap for a small loan used to buy a car?
A: The opinion finds "no conflict between Sections 63-19-43 and 75-67-181." They govern different transaction types, so neither overrides the other; which applies depends on the facts of the financing.

Q: What is a "retail installment contract"?
A: The opinion quotes Section 63-19-3(g): "an agreement entered into in this state pursuant to which the title to or a lien upon the motor vehicle . . . is retained or taken . . . as security for the buyer's obligation," and notes it includes a conditional sales contract.

Q: What is a "consumer installment loan" under Section 75-67-181?
A: The opinion describes it as a loan by a small-loan licensee. Section 75-67-181 allows a finance charge up to 59% per annum on loans of $4,000 or less "regardless of the loan's purpose," including a loan a borrower uses to buy a vehicle.

Q: How do Sections 75-17-21 and 75-67-181 relate?
A: The opinion quotes Section 75-17-21, under which a small-loan 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." Section 75-17-21's tiers include 24% per annum on the portion of the balance above $2,500 up to $5,000; Section 75-67-181's alternative is 59% on loans of $4,000 or less.

Q: What is "Class 4" under Section 63-19-43?
A: The opinion quotes it as "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," with a cap of 28.75% per annum on the unpaid balance.

Q: If the documents are ambiguous, who decides which statute applies?
A: The opinion says "the facts surrounding [the] purchase and financing must be determined and the appropriate statute applied," leaving that factual determination to the court.

Background and statutory framework

The question came from a justice court judge who suggested a conflict between Section 63-19-43 (28.75% for motor vehicles older than four years) and Section 75-67-181 (up to 59% APR for loans under $4,000 for the purchase of any goods). The opinion answers that the rules of statutory construction apply only "when a statute is ambiguous, has conflicting provisions within it, or conflicts with another statute" (Frierson, 2017, quoting Forman v. Carter), and finds no ambiguity or conflict here.

Section 63-19-43 is part of the Motor Vehicle Sales Finance Law and sets the maximum finance charge for retail installment contracts, defined in Section 63-19-3(g) by the seller's retention of title or a lien on the vehicle as security. Section 75-67-181, part of the Mississippi Consumer Alternative Installment Act, allows a small-loan licensee to charge up to 59% on loans of $4,000 or less "in lieu of the interest and charges in Section 75-17-21." Section 75-17-21 in turn governs the rates for consumer installment loans by licensees under the Small Loan Regulatory Law (Section 75-67-101 et seq.) and Small Loan Privilege Tax Law (Section 75-67-201 et seq.).

A footnote adds that, unlike Section 63-19-43, Section 75-67-181 "does not limit the subject of the loan to motor vehicles," and cites the Napier opinion (Nov. 15, 1996) that the rates in Section 75-17-21 "control all loans made by small loan lenders regardless of the purpose for which the loan was made."

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).