Reg Z - Auto Loan Admin Fee

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Question:

On closed end indirect auto loans, we charge a $30.00 administration fee that the dealer includes in the total administration fees. We include the total administration fees on the contract in the amount financed. When the deal is funded, we take the $30.00 fee out of the dealer's check. Are we in compliance with Reg Z, or should the fee be shown as a prepaid finance charge?

Answer:

It's a charge you assess in the loan transaction. It is a PPFC and must be disclosed as such.

If you have not been showing this $30 as a PPFC, then your finance charge is out of the $10 tolerance and you could possibly owe reimbursements. See 226.18(d).

First published on BankersOnline.com 3/22/10