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#345351 - 04/11/05 04:32 PM Auto loan - Negative amortization
straw Offline
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straw
Joined: Nov 2002
Posts: 9,121
We are launching a 90 day no payment campaign. Interest will accrue, with first payment delayed 90 days, and term increasing concordinantly.

Do we need to disclose that negative amoritzation will apply? I can only find the requirement related to Home Equities.

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#345352 - 04/11/05 09:11 PM Re: Auto loan - Negative amortization
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,183
Toano, VA
Because state laws sometimes prohibit or restrict this, you should discuss it with bank counsel.
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#345353 - 04/11/05 10:00 PM Re: Auto loan - Negative amortization
straw Offline
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straw
Joined: Nov 2002
Posts: 9,121
I was afraid of that

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#345354 - 04/11/05 10:17 PM Re: Auto loan - Negative amortization
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,183
Toano, VA
Quote:

I was afraid of that



Even if neg am is illegal, that doesn't mean you can't do what you want (assuming you can service it.) Sure, there will be some erosion of your yield. That's easily recovered with a slightly higher interest rate or a small fee. If your servicing system uses US Rule, then you don't have neg am, anyway.
_________________________
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