John Warner applicable for renewal/extension??

Posted By: AngelMae CRCM

John Warner applicable for renewal/extension?? - 08/24/12 05:16 PM

We had six month single pay loan for the purchase of the automobile (so John Warner does not apply since the auto purchased is securing the loan). However at the end of six months, the loan was refinanced/renewed/ extended for another three. A new note was issued...now the money is not technically purchase money...just a loan secured by an automobile...right? Now it is a John Warner loan and needs those disclosures? Is there an exemption to this type of situation that I am missing? I am leaning towards disclosures were needed for the second loan.
Posted By: RVFlyboy

Re: John Warner applicable for renewal/extension?? - 08/24/12 07:24 PM

I think that depends on whether the loan was refinanced, renewed, or extended. They are not the same thing. If it was refinanced (new obligation satisfies and replaces existing obligation), then yes, I think it is a covered transaction. If renewed (typically done with an additional note form that does not replace the initial obligation) or extended (typically done with a modification or extention agreement), then I think the loan is still a purchase money loan and would not be a covered transaction. At least that's how I would look at it, but I don't know that there is anything that specifically states that is true.
Posted By: Andy_Z

Re: John Warner applicable for renewal/extension?? - 08/24/12 08:52 PM

I've seen nothing addressing this, but since the law is consumer protection, I'd tend to agree with Jim's analysis and say it is covered on a "new" loan as if those renewal terms were abusive, that would be an easy end-around the law and defeat the disclosure requirements.
Posted By: AngelMae CRCM

Re: John Warner applicable for renewal/extension?? - 08/27/12 02:46 PM

That is what my line of thinking is in this case. Thanks for the input, I appreciate it!