An equipment manufacturer (tractors) would like to partner with a bank in offering their equipment to consumers. This sounds similar to indirect lending, but would appreciate feedback based on the below scenario to determine how the disclosures should be provided in regards to the APR.
If a bank makes a loan to a consumer with an APR of 2.99% fixed for 5 years, but the bank receives a discount from the equipment manufacturer such that the effective yield is 4.99%, which APR is the bank required to disclose to the consumer? It seems that the APR for the consumer would reflect only what they are a party to, meaning $30,000 equipment price, payment of $x.xx and term of “yy” months results in an APR of 2.99%.
Since the discounts do not impact the consumers responsibility, the thought is that the consumer's rate (2.99%) and payment information is the only piece that has to be disclosed. Appreciate feedback. Thank you!