Licensing Requirements

"Equipment dealers and suppliers, while not subject to specific licensing, are covered by particular statutes including certain specific prohibited acts. See Arizona Revised Statutes, Title 44, Chapter 20- Equipment Dealers.

Motor vehicle title loans are included in the definition of “sales finance company,"" which means a person engaged, in whole or in part, in the business of purchasing retail installment contracts from one or more retail sellers, and includes a person engaged, in whole or in part, in the business of creating or holding retail installment contracts that exceed a total aggregate outstanding indebtedness of $50,000. “Retail installment transaction” means any transaction evidenced by a retail installment contract entered into between a retail buyer and a retail seller wherein the retail buyer buys a motor vehicle from the retail seller at a cost payable in one or more deferred installments. (A.R.S. § 44-281) A person shall not engage in the business of a sales finance company in this state without a sales finance company license. (A.R.S. § 44-282)"

Lenders should refrain from applying “Consumer Loan” licenses with the State Banking Department unless it is absolutely necessary. These “Consumer Loans” are any direct loans of $10,000 or less that are not secured by Arizona real estate. Lenders should also be careful to comply with Arizona’s Motor Vehicle Time Sales Disclosure Act which applies to a “secondary motor vehicle finance transaction,” defined as follows: (a) Any contract that includes provisions for either: (i) Obtaining a security interest in or lien on a motor vehicle other than in connection with the sale of that motor vehicle. (ii) The sale or conditional sale of a motor vehicle and the seller's right to retain use of the motor vehicle after the sale or conditional sale. (b) Includes any conditional sales contract or contract for the bailment or leasing of a motor vehicle in which the bailee or lessee agrees to pay for use of the motor vehicle and the bailee or lessee is required to become or has the option of becoming the owner of the vehicle for any or no compensation. (c) Does not include any commercial transaction as defined in § 44-291. Therefore, the finance transaction that contemplates the sale or transfer of a non-consumer loan secured by a titled vehicle would not fall within the scope of Arizona’s Motor Vehicle Time Sales Disclosure Act.