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state dispute arises, the buyer will often attempt to sue the dealer in the buyer’s home state and claim that the dealer should have been licensed in their home state and/or that the law of their home state (including those laws addressing contract disclosures, and related consumer credit requirements and limitations) applies to the transaction. This could potentially trigger scrutiny by state regulators too. Also check your dealer agreements with your lenders. Many dealer agreements contain representations by you that the deal has been conducted entirely within your dealership, and thus may subject your deal to repurchase. Note that one areawhere guidance from the states does exist in connectionwith Internet sales is advertising. Many states do have specific rules in connection with online advertising. So, it is important to consult a knowledgeable attorney on how to minimize your risks when selling to out-of-state customers through an Internet sale process. State Law Restrictions on Fees State laws also limit or restrict fees that may be charged by a dealer, especially when the vehicle purchase will be financed in a credit sale. Some fees are only applicable to credit sales (e.g., application fees, credit investigation fees, lien recording fees, etc.). State retail installment sales acts and consumer credit codes often limit or prohibit the kinds of fees that may be charged in a credit sale. Some of these fees may also be treated as a finance charge under federal law, state law, or both. Some fees are charged in both cash and credit sales. Document preparation (“doc fees”) is a good example of a fee that dealers typically charge in both cash and credit sales. As a general rule, a dealer should not charge doc fees in a credit sale unless the dealer also charges the same doc fee in a cash sale. This is because charging a doc fee only for credit sales means that the doc fee will be treated as a finance charge under federal law, and that complicates things for the dealer and any assignee of the finance contract. In many states, a doc fee that is a finance charge would be subject to rebate upon prepayment of the finance contract. In addition, the systems responsible for creating the federal Truth in Lending disclosures on a RISC will not be able to calculate the impact of the doc fee on the finance charge and APR disclosures. So, a dealer that charges a doc fee only on credit sales is likely to understate the finance charge and APR in violation of federal law, and possibly state law as well. Even where doc fees are charged on both cash and credit sales, state law may limit the doc fee to a specific dollar amount or to a reasonable amount in relation to the actual costs of preparing and filing documentation. A great deal of litigation has occurred relating to the propriety of doc fees charged by dealers in states where no specific amount is provided by law. Know your state law on permissible doc fees and consult your local attorney if no specific amount is permitted, or the doc fees are limited to being “reasonable.” You should consult with your attorney to ensure that all fees comply with applicable state law. State Single Document Laws A single document rule requires that all documents, or certain documents, evidencing the sale and financing transaction between the dealer and the buyer be contained in one document. The state single document rules take varying forms. Usually, however, a state’s rule will permit multiple pages. You should make certain that you know whether your state has a single document rule and how it applies to your documentation of a deal.

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