By the Division of Banks

Permissibility Of Distributing Loan Applications From Automobile Dealerships

It is the position of the Division of Banks that a credit union may through selected automobile dealerships make its applications available to members of the credit union. A credit union's authority to make such loans, however, only extends to its members. In addition, if such loans were to be made for under $6,000.00 and at an interest rate exceeding 12% per annum, the credit union would be required to comply with the rate limitations in 209 CMR 26.00 et seq. Furthermore, the automobile dealership in such instances would be required to obtain a small loan agency license pursuant to Mass. Gen. Laws chapter 140 § 96 and comply with its implementing regulations.