If a person is approved for a $40,000 car and the cost of the vehicle is $35,000 and they decide to buy the extended warranties, add on's like undercoating or TT&L paid from proceeds...are any of those things considered cash out or part of the purchase?
That's the big question of the day. Our legal has advised us that until the DOD comes out with a better explanation of what they mean those items would be included in the "cash out" and not part of just the purchase of the vehicle. The DOD has already expressed how much they don't believe in offering ancillary products so I think it's safe to say that they are not part of the purchase.
And everyone is supposed to be in compliance with this in a couple of weeks. I'm sure training and procedures are happening as we speak.
If TT&L, and bank fees will make the loan covered, then what is the point of the auto purchase exemption? It will make a lot of vehicle purchases now covered. I can see additional products like warranties being considered add on and losing the exemption for them, but bank fees/TT&L make no sense.
#2097955 - 09/12/1603:10 PMRe: Purchase Money for Auto with add ons...Cash Out??? JC
raitchjay
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Bank fees? I mean....you wouldn't have to pay bank fees if you plopped down cash for the auto (not that people often plop down cash for it, but...they could).
#2098021 - 09/12/1605:47 PMRe: Purchase Money for Auto with add ons...Cash Out??? JC
raitchjay
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Joker...i don't know.....i don't think the regulation or the FAQs properly discussed the question...i'm saying it's problematic and i think we need clarification (that i doubt we get).
Since we need more clarification, but at the same time we need to move forward, I'm taking the stance that we can finance 100% and the fees and still have an exempt purchase money loan. I'm thinking the intent is to cover multi-purpose loans. So the purchase of a vehicle and the refinance of another in the same transaction is a covered transaction, whether or not fees are financed.
#2098550 - 09/14/1608:59 PMRe: Purchase Money for Auto with add ons...Cash Out??? JC
raitchjay
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What about credit life premiums financed into the loan......would ya'll look at those the same? It seems a bit of a stretch to me to think of that particular "fee" the same as i would a doc fee or the like. Or would financing the premium mean that you have "exceeded the purchase price"?
#2100720 - 09/28/1601:20 PMRe: Purchase Money for Auto with add ons...Cash Out??? JC
Luv2run
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Joined: Jan 2015
Posts: 608
Am I correct in thinking a refinance of an external car loan into one of our bank car loan products would be a covered transaction? It has been done in the past so I want to cover this in training just in case.
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