Licensing A Sales Finance Company - Q4 1999
Licensing of a limited liability corporation (LLC) that does not have a place of business or employees in Massachusetts and purchases retail installment contracts originated by retail sellers is governed by Chapter 255B section 1.
Chapter 255B section 1, applicable to motor vehicle installment sales, defines a "sales finance company," in pertinent part, as "...(2) any person engaged, in whole or in part in the business of purchasing retail installment contracts from one or more retail sellers..." A retail seller is defined in chapter 255B as "a person who sells a motor vehicle to a retail buyer under or subject to a retail installment contract."
It is the position of the Division that if the LLC will not be purchasing contracts from retail sellers, it would not be required to obtain a license under chapter 255B as a sales finance company. However, the LLC would be classified as a "holder", as defined in section 1 of chapter 255B and would be subject to certain sections of the chapter applicable to "holders" of installment contracts (See chapter 255B, sections 11,15,17,18,19,19A,20).