We're thinking about adding a doc prep fee to consumer loans not secured by real estate, maybe a $99 flat fee. Any advice on how to disclose or take into income? Can the amount be credited directly to income or must it be recognized over the life of the loan? Thanks.

It would be a prepaid finance charge and would be disclosed as such to the consumer. Income would be determined by FASB Statement No. 91. Check State law for whether the charge/fee is allowed.

As a PFC, it has maximum impact on the APR. For smaller, shorter term loans, that's going to be a big hit. Before getting married to this idea, determine if you will remain competitive.

Hatman, read Richard's message again! Regulator was using surrogates for gender bias on unsecured loans. Identified that females on average had higher APR than males. There was NO deviation from the pricing sheet, BUT women were more conservative and in most cases borrowed for a shorter period of time, or for less money. We had to pull defensive samples to show that there were no differences on the rates, the APR affected ONLY by shorter terms and/or lower principle.

When you consider the $99 flat fee has the same effect as interest, compute a $1500, 6 month loan and find out what the $99 does. Also, think of your state's usury laws. It could very easily kick it over in more conservative states.

ALSO, do you think it might discourage certain groups from applying with yourselves. Look at disparate impact. If it has a greater affect on certain segments of the population, there could be a fair lending issue too.