By the Division of Banks

Purchasing Retail Installment Sales Contracts From Dealers In Farm Equipment

Mass. Gen. Laws chapter 255D governs the licensing of entities engaged in purchasing the retail installment sales agreements or revolving credit agreements of one or more sellers. However, such licensing is required only in cases where the agreements cover goods or services purchased for personal, family or household purposes. It is the Division's position that if agreements purchased by an entity primarily are for agricultural or commercial purposes, a license to issue a private label credit card to the farm equipment dealers is not required.

Mass. Gen. Laws chapter 140, section 114B establishes a maximum interest rate of 18% per annum for open-end credit plans, but this limitation is applicable only to transactions for personal, family, or household purposes. If a private label credit card is for agricultural or commercial purposes, the sction 114B rate limitation does not apply; the interest rate on such cards would be a contractual matter between the issuer and the cardholder.