The Truth About Disclosures
Q. Do I really need to review the Federal box on a contract with my customers or can I simply request their signatures?
A. Pursuant to Regulation Z/ Truth in Lending, the Disclosures section of Subpart C stipulates that every F&I person or sales manager who completes the F&I process with a customer must review the federal disclosure box on a contract or lease agreement as well as disclose the itemization of all charges. The customer is entitled to a full disclosure of all terms and costs of the transaction in order to compare the total cost of a purchase.
Full and complete disclosure is not only the right thing to do; it is the legal thing to do. The 17 items you must disclose are:
•Creditor
•Amount financed
•Itemization of amount financed
•Finance charge
•Annual percentage rate (APR)
•Payment schedule
•Total payments
•Demand features (if any)
•Total sale price
•Late payment charges
•Security interest
•Prepayment clauses
•Insurance and debt collection
•Certain security – interest charges
•Contract reference
•Assumption policy
•Required deposit
Regulation Z also dictates the way you advertise credit and how you can calculate APR. While the individual states govern usury, the federal government mandates disclosure. The watchword for every dealership is full disclosure. Anytime you quote a payment, you must fully disclose the APR and terms used to calculate the payment. Your customers are entitled to the truth. The law requires it. The marketplace demands it. The reputation of our industry depends on it.
Kelly’s Korner Column, Oregon IADA Squeaky Wheel Newsletter, February 2005 Issue, p. 21