Texas Finance Code - FIN § 348.125. Trade-in Credit Agreements Offered in Connection With Retail Installment Contracts

(a) A retail seller may, at the time a retail installment contract is executed, offer to sell to a retail buyer a trade-in credit agreement or similarly named agreement.

(b) A trade-in credit agreement is not considered an insurance product.

(c) To ensure the faithful performance of a retail seller's obligations to a retail buyer under a trade-in credit agreement, the retail seller must be insured under a contractual liability reimbursement policy approved by the commissioner of insurance and issued for the benefit of Texas residents.

(d) In addition to other disclosures required by state or federal law, if a retail seller offers to a retail buyer a trade-in credit agreement, the retail seller shall give the retail buyer at the time the retail installment contract is executed a copy of the written trade-in credit agreement and written notice that the retail buyer:

(e) The amount charged for a trade-in credit agreement offered in connection with a retail installment contract may not exceed five percent of the cash price of the motor vehicle that is the subject of the retail installment contract, including any attached accessories and excluding the price of services related to the sale, the price of service contracts, taxes, and fees for license, title, and registration.

(f) A trade-in credit agreement must require the retail buyer to provide proof of insurance settlement documents in order to obtain the credit.  A trade-in credit agreement may not require the retail buyer to provide any other documentation in order to obtain the credit.

(g) If a retail seller enters a trade-in credit agreement with a retail buyer, the retail seller must comply with the terms of the trade-in credit agreement in connection with the purchase or lease of a subsequent motor vehicle.  A retail seller must provide any credit required under a trade-in credit agreement at the time of the purchase or lease of a subsequent motor vehicle.

(h) The benefit to be provided in connection with a trade-in credit agreement must bear a reasonable relationship to the amount charged for the trade-in credit agreement and the amount, term, and conditions of the retail installment contract.