Thread Options
#2263302 - 12/07/21 10:22 PM non-refundable processing fee
dutchbltz Offline
100 Club
Joined: Oct 2015
Posts: 183
Are there any issues/concerns around charging a 'processing fee' upfront on a consumer auto loan request? More particularly if that fee is not refundable; but I'm interested in any concerns surrounding that that I should perhaps consider.

This fee is listed on our rate sheet; but does not specify if it's refundable or not; nor when it will be paid.

Thoughts?

Return to Top
Lending Compliance
#2263306 - 12/08/21 11:50 AM Re: non-refundable processing fee dutchbltz
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,962
Galveston, TX
If by rate sheet you mean something that ends up in the hands of a consumer - get ready for a lookback and refund of any fees collected that were not refunded if the loan did not close.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2263315 - 12/08/21 02:11 PM Re: non-refundable processing fee rlcarey
dutchbltz Offline
100 Club
Joined: Oct 2015
Posts: 183
Are there any citations to support this? This doesn't sit right with me but I can't lay my finger on where it says we can't.

Return to Top
#2263317 - 12/08/21 02:25 PM Re: non-refundable processing fee dutchbltz
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,962
Galveston, TX
Try UDAAP - false and unclear advertising.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2263324 - 12/08/21 03:03 PM Re: non-refundable processing fee dutchbltz
dutchbltz Offline
100 Club
Joined: Oct 2015
Posts: 183
What if the rate sheet did not end up in the customers' hands? (I don't know if it did or didn't.)

One of my concerns is that the fee is not applied consistently. It feels like a Fair Lending concern to me. But I also feel like there are probably other concerns - for example, if it's charged up front, shouldn't it be an application fee not a processing fee?

Return to Top
#2263325 - 12/08/21 03:23 PM Re: non-refundable processing fee dutchbltz
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
If it's not applied consistently then you definitely have fair lending concerns.
_________________________
My Opinions Only

Return to Top
#2263364 - 12/08/21 07:41 PM Re: non-refundable processing fee dutchbltz
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,379
Florida
Besides Fair Lending, think reputational. "The bank charged me $25. and never made me the loan." Expect regulatory complaints
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2263393 - 12/09/21 03:53 PM Re: non-refundable processing fee dutchbltz
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,710
Bloomington, IN
What loan fees you can contract for is regulated by state law. Does your state law allow contracting for non-refundable fees?

IN non-refundable fees are tiered based on loan amount and they must be contracted for as being non-refundable.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top

Moderator:  Andy_Z