What It Is
A consumer retail installment loan finances a purchase at the point of sale. The buyer repays the price and a finance charge in scheduled installments over a set term.
Many of these obligations are written as retail installment contracts. The merchant extends the credit and then assigns the contract to a finance company. Others are loans made by a lender at the merchant’s point of sale.
Why It Is Complex
Each contract is small, and each depends on one buyer and one merchant.
- State retail installment sales laws govern disclosures, pricing, and assignment, and they differ from state to state.
- Federal rules on credit disclosure, fair lending, and debt collection operate alongside state law.
- The holder of a contract can be subject to the buyer’s claims against the original seller, so merchant conduct matters.
- Servicing and collections continue for the full term of each contract.
- Collections depend on the originator’s credit standards and on each merchant’s sales practices.
Northway’s Role
Northway’s focus in this area is capital for lenders and finance companies that originate or acquire these loans and contracts. Northway does not make loans to consumers.
Inquiries
Companies in consumer retail installment lending can reach Northway through the inquiry form.