Banking Interpretations

General Business Law 46
NYBL Miscellaneous

From: Steven Barras





Guidance-Collateral Loan Broker

In response to your inquiry below, I note that the expanded activities contemplated by you would still constitute the business of a collateral loan broker as they would appear to fall within the definition of such term set forth in Section 52 of the General Business Law (as you indicate that you will be "offering pawns" on other types of personal property, I assume that is your intent). Section 46 of the General Business Law sets forth the maximum interest rate that may be charged by collateral loan brokers and that section must be reviewed to ascertain whether the expenses specified in your E-Mail may be collected from borrowers in addition to the maximum rate of interest authorized by that section. The Banking Department has no jurisdiction over collateral loan brokers, claims no special expertise on the subject, and has no authority to render an interpretation of the applicable sections of the General Business Law. You may wish to retain private counsel to obtain a legal opinion on the matter.

I trust that the foregoing is responsive to your inquiry.

Steven Barras
First Assistant Counsel


February 2, 2010

New York State Banking Department
Marjorie E. Gross, Deputy Superintendent of Banks and Counsel
Via Email: [email protected]

As a licensed Collateral Loan Broker in New York, I am very familiar with General Business Law 45, Sections 40 through 55. The municipality which licenses me as a Collateral Loan Broker does not overlay any additional requirements or restrictions on that which the State has stipulated. While I recognize that your Department can not offer legal advice, I am seeking some guidance on New York State laws beyond those with which I am most familiar.

I would like to expand my services by offering pawns on Automobiles, Trucks, Recreational Vehicles and Boats. I would like to offer such collateralized loans on such personal property for an interest rate not exceeding 4% per month provided that there are no restrictions for me to be reimbursed from the Borrower for certain specialized expenses; namely: Mechanical & Physical Appraisal, Pick-up & Delivery of the property, Storage, Insurance, and Filing Fees. I have very deliberately underlined and italicized the word reimbursed in my previous sentence because I am in no way looking for these expenses to result in profits for me. I simply seek to pass along these special expenses on these specialized pawns, and not have them construed as being usurious. As I do with all my record keeping, I will keep meticulous records to provide a complete audit trail of all such expenses.

Is there anything contained in any New York State law that would prohibit or restrict me from offering such collateralized loans and being reimbursed for these special expenses from the Borrower?

Thank you for your help.