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#2185002 - 07/11/18 07:41 PM Indirect Lending
Anonymous
Unregistered

Direct Lending Vs. Indirect Lending. I want to give you a scenario and have you tell me if it is direct or indirect lending.

1. Consumer submits loan application (income, creditworthiness, price, etc…) to dealer/retail business
2. Dealer/retail business submits loan application information to lenders, and my bank is chosen as the lender
3. Manufacturer offers potential dealer/retail business compensation (such as incentives)
4. Lender sets note rate for consumer, and dealer/retail business closes the sale
5. Lender funds note via ACH to dealer/retail business account.
6. Lender produces and owns the contract paper and services the loan completely, including any collection activity that might occur. This is all in accordance with the agreement the dealer/retail business has with us as the lender.
7. If the dealer/retail business can’t sell the item within a specific period of time governed by the terms, the manufacturer will pick up and pay the item off.

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#2185220 - 07/12/18 09:05 PM Re: Indirect Lending Anonymous
Anonymous
Unregistered

Original Anon here. What determines if the above scenario is direct or indirect? Is it whether the bank owns the paper, or is it whether or not we fund directly to the dealer account? I am open to the guidance anyone has. Thank you.

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#2185418 - 07/16/18 01:25 PM Re: Indirect Lending Anonymous
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
What you describe is the typical scenario for indirect lending.

You will need to check state law but generally if the dealer has any type of participation in the deal then it is indirect lending.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2185433 - 07/16/18 01:58 PM Re: Indirect Lending Anonymous
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Why do you need to know? What's the context in which the question arises?
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#2185563 - 07/16/18 10:59 PM Re: Indirect Lending Anonymous
Rocky P Online
Power Poster
Joined: Jun 2003
Posts: 7,650
Florida
Direct lending - applicant makes application with lender directly
Indirect lending - applicant applies through a 3rd party (auto dealer, contractor, etc) who submits application to lender(s) for decision.
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