Our bank wants to provide indirect deals with 90 days before the first payment is due, interest will accrue during these 90 days. I am concerned that this results in capitalized interest and the customer pays more over the term of the loan. Does anyone know if this is common in the industry and how to address the disclosure piece?
thank you

1. "Indirect deals"--what kind of merchants and deals?
2. Assuming that the first payment is insufficient to cover 90 days' interest, how does your servicing system account for the shortfall?
3. What do you mean by "disclosure piece?" TIL? State law? Other?

Not too common for the reasons Richard indicated. Check your state laws. There may be restrictions on payments and also capitalizing interest.

Also for a safety and soundness issue, do you really want not have contact with customers who you have not really met for a quarter of the year? Bet your first payment default skyrockets!