When you enter into a contract it is important that you understand what it is you are signing. This applies to something as simple as signing up for an online newsletter (what are they really going to do with your information) all the way to making a major purchase such as a car.
For the people on the other side of the contract, such as in the F&I department of a dealership, ensuring your customer understands the mountain of documents they must sing is in your best interest. This ensures you are in compliance with the Truth In Lending Act (or TILA) and decreases the likelihood that your borrower will default on their loan.
Here are some quick facts to bring you up to speed:
What is the Truth in Lending Act?
The Truth in Lending Act (TILA) requires banks and other
institutions who offer loans to make appropriate disclosures before
lending funds. Originally enacted as Title 1 of the Consumer Credit
Protect Act, TILA is designed to protect against unfair lending
practices.
What is Regulation M?
Regulation M is set up as a part of the Truth in Lending Act,
which covers exactly how your consumer leasing provisions
are spelled out in your process.
What is Regulation Z?
In addition to Regulation M, Regulation Z requires you to
ensure that credit terms are disclosed so consumers can
compare credit terms more easily and more knowledgeably.
What does the Truth in Lending Act Protect Against?
- Unfair credit billing
- Unfair credit card practices
- High-pressure sales
- Misrepresentations
- Failure to disclose
What types of borrowing are protected by the Truth in Lending Act?
- Equity line of credit
- Revolving line of credit (such as a credit card)
- Mortgages
- Auto loans
Are your disclosures:
- Clear?
- Easily Understood?
- Written in Plain Language?
- Using Specific Language?
The Truth in Lending Act is one of a multitude of regulations dealers are on the hook for. But staying on top of them all shouldn’t make you panic.
F&I Software & Services Designed for Dealerships
Vera F&I software and services are specifically designed for vehicle dealers including automotive, truck, RV, marine, and power sports. Our F&I compliance solutions will help you develop compliant sales processes, train sales and finance teams, safeguard consumer information, and maintain clean deal jackets—all to help you minimize risk and maximize profits.
