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#1973569 - 10/31/14 10:10 PM Indirect Lending
husker14 Offline
Member
Joined: Aug 2005
Posts: 50
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

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Lending Compliance
#1973579 - 11/01/14 11:55 AM Re: Indirect Lending husker14
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,087
Toano, VA
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?
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#1973582 - 11/01/14 01:22 PM Re: Indirect Lending husker14
Rocky P Offline
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Joined: Jun 2003
Posts: 7,441
Florida
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!
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