2015 GNYADA MEMBERSHIP DIRECTORY

HOT TOPICS 2015 GNYADA Membership Directory

charged an additional sum being the daily finance charge from the day the consumer surrendered the trade-in to the day the dealer gets around to sending in the payoff. No courts have ruled on this issue yet but the risk of an adverse ruling is out there. If possible, a good practice would be to obtain a “same-day” payoff quote and charge the consumer that amount with the dealer paying any additional daily finance charges from delaying to make the payoff. This will cost you some money but until the class actions are decided, it may be a prudent way to proceed. You may also have difficulty getting same-day payoff quotes from certain lenders. Dealertrack is integrating same-day payoff quotes for certain lenders but many lenders at this writing don’t have the functionality yet. In that case, you may have to calculate the payoff by subtracting the daily finance charge from the 10- or 15-day notice. Some lenders provide a daily rate to make this easier to do. Dealertrack provides a means to calculate a same-day payoff by providing the daily interest accrual. 1. Always have a “permissible purpose” to pull a consumer’s credit report. A signed authorization from the consumer (generally on a credit application) is strongly preferred but not required when the customer has applied for credit and both the dealer and customer understand they are close to completing a transaction, except in Vermont. Most credit applications, which are usually signed by the consumer, contain language where the consumer agrees that you can access their credit report. Financing sources usually obligate dealers to either post or provide to credit applicants a list of the names and addresses of the financing sources with which the dealer does business and to which the dealer may send their credit application. This is required by the Fair Credit Reporting Act (FCRA). 2. Give or send a Risk-based Pricing credit score disclosure exception notice to every applicant for credit. Obtain the consumer’s credit score and the distribution of credit scores for the scoring model used from a credit bureau or a third-party source such as Dealertrack. The only exception is for customers who do not have a credit score, and they should receive the FTC Risk-based Pricing Rule notice for consumers without a credit score. If you don’t typically pull credit on applicants, you may have to buy a credit score to give the credit score disclosure notice to all credit applicants. Give the notice to the consumer as soon as possible after getting the information necessary to complete the credit score disclosure notice form. Give the notice by the earlier of closing the deal or within three business days. Keep a copy in the deal jacket. While not required, it is a good practice to get the customer to sign the file copy of the credit score disclosure notice acknowledging receipt. 3. Send adverse action notices when required. Remember the three situations in which you must send an adverse action notice: a) You take a consumer’s credit application but do not send it to any financing source; b) You unwind or re-contract a spot delivery deal; and c) You can’t get the customer financed either because no financing source approves the customer’s credit application on terms acceptable to your dealership or the customer does not accept or use your final credit offer after negotiations are completed. When unwinding or re-contracting a spot deal, a good practice is to hand the customer the adverse action notice along with the new contract when they return to the dealership or when they return the vehicle in an unwound spot transaction. Note that adverse action notices require inclusion of a consumer’s credit score and credit score Recommended Practices

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