When the customer is purchasing a vehicle from a dealer, the dealer will typically collect the $10 fee and put the bank’s lien on the vehicle when they do the other titling paperwork. Do we need to disclose the fee? It is a cost of doing the secured loan, but we are not collecting it.

If there is a separate charge for putting the lien on the title, then yes. If you are not disclosing it, you cannot exclude it from the finance charge. The dealer is collecting it for you.

Not sure if I am understanding you correctly...

If the charge is separate we want to disclose it so we can exclude it from the finance charge?

What if the $10 is something that the DMV charges or the dealer charges...then we don't have to disclose it?

Whether or not a charge like this is a finance charge is determined by whether or not they would have to pay the same fee if they bought the car with cash. If the $10 charge is specific to getting your lien placed on the title, then it is caused by getting the loan. If the $10 is paid to public officials, you can exlcude it from the finance charge by disclosing it. If the $10 is something that the dealer is imposing, then it should be prohibited in your dealer contract, because it would be a finance charge regardless, as there is no way to exclude it.

I think I am getting it now. The $10 was collected by the dealer to get the bank on the lien. So therefore we should disclose it and it should be a finance charge since the customer would not have been charged this fee if they had went to the lot and paid cash for the car.

That would be your point number 1 correct?

Yes, and I would visit with the dealer and tell them to knock it off if they want you to buy the paper. It is purely a junk fee. It does not cost them $10 to type an additional line on a title application.

Well this is a fee that is charged by the department of motor vehicles to get our name on the title. The cost is $10 dollars. The dealer just charges it because they write up the MV1 and put our name on the lien.

I am still thinking of the right thing right? Sometimes I don't explain things real well. I am thinking we still disclose and it still is a finance charge?

I am sorry if I am being confusing.

If it is a required fee by the DMV, then if you disclose it, you can exclude it. See 226.4(e).

So conversly if we don't disclose and itemize this fee, we have to include it as a finance charge?

Yes

Thank you sir. You're help is much appreciated

What if the bank is paying the DMV fee to add our lien on behalf of the borrower? Do we still disclose it in the Fed box per 226.4(e)?

It has to be itemized and it can be itemized outside the Fed Box. Your HUD-1 would do that regardless if you thought you had too or not.

Thanks

I am interested in this topic if I may ask for further clarification.

In my state, the DMV charges a separate fee to file an electronic lien for paperless title. This fee is in addition to the DMV charge for simply processing the title. The DMV also requires the electronic filing to be processed through a facilitating vendor, which also charges a fee. The vendor collects the fee that they keep and also the fee that is passed on to DMV. In a cash transaction, the consumer would only pay the fee for obtaining a title, not the additional fees for electronic lien filing.

So, the DMV charge for processing a title and, under 1026.4(e), the ELT fee (ultimately payable to DMV) are not finance charges. What do you think about the fee payable to the vendor processor? DMV requires the transactions are processed by the vendor but the vendor charges a separate fee for their service that they keep.

And, in properly itemizing all this, should it be (for example) $10.00 My State DMV title fee, $2.00 My State DMV ELT fee, $1.00 ABC ELT processing fee?

Tangled up in fees and your expertise is appreciated!

The vendor fee is a finance charge.

Thanks. That helps.