The Dec 2017 clarification - a purchase loan transaction would be a covered loan if it finances credit-related product or service rather than a product or service expressly related to the motor vehicle or personal property (e.g., guaranteed auto protection insurance, credit insurance premiums).

Under Reg Z definitions SII (VSI) is insurance is property insurance.

I wanted to confirm that financing SII on a purchase vehicle transaction would not trigger MLA coverage since it is not "credit insurance".

Thanks in advance.

Bump. I'm wondering the same thing. If the premium for property insurance is financed as part of the contract, would it still meet an exception, or would MLA apply?

Vendors SINGLE Interest insurance or SINGLE Interest Insurance (I assume that is SII?) protects the bank. My experience with VSI was that we issued it when the borrower defaulted, allowing their coverage to lapse and we didn't want to demand and repo over that. But it didn't protect the borrower or provide required liability. In this perspective, I'd say it would count and potentially disqualify the loan as an MLA exception. VSI programs may differ from my experience so YMMV.

The acid test here was does the product help the bank, or help the borrower get in the car. I would say requiring the borrower to have a suitable policy on their own helps the borrower. A more expensive policy from the bank, protecting the bank's interest, is for the bank.