It sure is HOT! When is the heat going to end?

F & I PRACTICES AND MENU MISHAPS THAT CAN SINK YOUR DEALERSHIP

Motor vehicle dealers are increasingly becoming targets for disputes about improper disclosures and deceptive trade practices and, in particular, dealership F & I practices. The negative reputation continues to get fuel from media programs that foster the consumers’ perception that misrepresentation is rampant in the motor vehicle industry. This is occurring even as many dealers are working diligently to make their sales and F & I practices more disclosure and consumer friendly.

The goal is to ensure that all of the Dealership’s products and services are offered to all of the customers all of the time. Claims frequently raised by consumers are related to allegations that the dealership’s representatives failed to make disclosures or made inconsistent disclosures. Examples of these claims include that the dealership included the cost of optional products or services that the consumer did not know he was purchasing in the price of the vehicle (commonly referred to as “payment packing”) or was told that he had to purchase them in order to complete the transaction.

A popular F & I trend geared toward avoiding consumer claims regarding deceptive F & I practices is “menu selling”. Read the rest of this entry →

Let me say thank you to all of the people responsible for a great NIADA Program in Orlando, Florida on Friday, January 15th. Keith Whann’s, “The Car Counselor’s T.A.R.P. Program” was attended by about 300 at Manheim’s Central Florida Auto Auction. Read the rest of this entry →

A special note of thanks to Charlie Pollina and his Manheim Philadelphia Team for a fantastic job in helping make NIADA’s Car Counselor’s TARP Program a great success! If you have not been to his auction, give him a visit, the facilities and people are top notch.

The NIADA Car Counselor’s TARP Program Travels to Philadelphia today. Mike, Georgia, LJ, Regina and I will be the guests of Manheim’s Philadelphia Auto Auction for the day. The program starts at 9, hope to see you there. If you can’t be there in person, be sure to catch some of the day’s program on Auttr TV Live!

In response to the question regarding how to indicate the balance of a manufacturer’s warranty when completing the FTC Used Car Sticker: Go to the Toolbox section of KeithWhann.com. and take a look at page 4 of “A Dealers Guide to the FTC Used Car Rule”.

Online registration is now available at www.WhannTarp.com for The Car Counselor’s TARP Seminar in Philadelphia. Online registration for the other upcoming events will be available in the near future. A special thanks to Joe, Juls, Christina and the rest of the NAC team for helping to make this possible!

Many dealers and lenders have asked for an opportunity to discuss questions regarding Lender Dealer Agreements they have in follow up to the recent Car Counselor’s TARP Seminar. I have agreed to set aside some time this afternoon following the sale at CFAA to discuss those issues and answer questions. We will meet at my office around 2 PM, everyone is welcome to attend.

In response to the consumer who asked following Saturday’s Car Buying “IS FUN” seminar whether there was difference between being a Co-Applicant, Co-Buyer or Co-Signer my thought is…good question?  Motor vehicle dealers and those in the industry frequently use the terms co-applicant, co-buyer, co-borrower and co-signer interchangeably. We have all heard the term “co-signer” improperly used to refer to someone who signed the same purchase agreement, sales documents, and retail installment contract that the purchaser of the vehicle signed. In other situations, the term may have been used more broadly to refer to someone who signed a separate document, like a guaranty agreement. While many think the distinction between these terms is merely academic, they have different meanings and have an impact on your business practices.

Consider the Credit Practices Rule, which is more commonly referred to in the motor vehicle industry as the “Notice to Co-Signer” Rule. This Rule covers all consumer credit transactions, except those involving the purchase of real estate, and requires creditors to provide a written notice to consumers before they co-sign obligations for others. The purpose of the Notice is to advise them about their potential liability if the other person fails to pay the debt.

For purposes of the Credit Practices Rule, a co-signer is defined as a person who will be liable on the credit contract, but does not receive or use the proceeds or goods purchased with the credit. Put another way, a “co-signer” undertakes liability as a favor to the main debtor who would not otherwise qualify for credit. A co-buyer or co-borrower, on the other hand, would share the purchased goods and/or loan proceeds. Since they receive a benefit from the contract, they are not considered co-signers under the Rule and are not required to get the Notice to Co-Signer.

So, as is often the case in consumer credit transactions these days, when more than one consumer signs paperwork, how do you know whether they are a co-applicant or a co-signer? Finding your answer begins with the credit evaluation of the individuals and how they represent themselves during the credit application process. Let’s start with the credit application itself. It is important to know whether the applicant requested individual credit and needed a co-signer, or whether two or more people jointly applied for credit. If the applicants are co-applicants, which would be defined as two individuals jointly applying for credit, their debt and income are typically combined for evaluation purposes. If one of the applicants is going to act as a true co-signer, the debt-to-income levels are evaluated separately to see if either person can “back up” the extension of credit. Regulation B (which implements the Equal Credit Opportunity Act) specifically requires that an individual’s intent to be a joint applicant is captured at the time of applying for credit and should help dealers to recognize and record the applicant’s intentions.

Remember, the applicant’s intentions will likely impact not only whether they are given a Notice to Co-signer, but also what other documents they sign. A co-buyer will typically sign all of the documents that the buyer of the vehicle signs, and will be identified as an owner on the Certificate of Title. A true co-signer, however, will only have to sign the retail installment contract or guaranty and those documents that are necessary for the lender to obtain a security interest in the vehicle. Keep in mind that your state laws may have special definitions or create special rules for co-applicants and/or co-signers. For example, for purposes of the Credit Practices Rule, a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law is not considered a co-signer for purposes of the Rule.

Well, there you have it, the differences between a co-applicant, co-buyer, co-borrower and co-signer. Until next time, this is The Car Counselor. And remember, car buying can be fun, and easy!

The answer can be found by watching the “What is a Certified Vehicle?” video on the Keith Whann TV channel in the Auttr TV section of this website.