Implementing the Truth in Lending Act/Regulation Z Initiative for Auto Dealerships

Because the company sells vehicles on credit, it is subject to the federal Truth in Lending Act (TILA) and its implementing regulation, Regulation Z. Regulation Z is a federal rule that requires creditors, like car dealers who sell cars on credit, to make disclosures to customers about the cost and terms of credit. Depending on the kind of credit offered, different disclosures may apply. For example, Regulation Z requires certain disclosures to be made in connection with open end credit (e.g. a credit card) and other disclosures to be made in connection with closed end credit (e.g. a loan or credit sale). Typical car sales, using retail installment sales contracts, are closed end credit. A typical retail installment sales contract offers fixed rate credit as opposed to variable rate credit. These types of transactions are subject to a specific set of disclosure requirements under Regulation Z.

It is important to comply with Regulation Z because the penalties can be severe. The company may be subject to both civil and criminal penalties for violating Regulation Z. For willfully and knowingly violating Regulation Z, the company may face criminal penalties of not more than $5,000, up to one year in jail, or both. In addition, both individual and class action civil lawsuits may be brought against the company for any violation of Regulation Z. In civil litigation, the company may be liable for the plaintiff's actual damages, statutory damages (capped at $500,000 for a class action), and reasonable attorney's fees and court costs.

Implementation Steps in this Guide

1. Edit and Distribute the Truth in Lending Act & Regulation Z Policy for Auto Dealers

2. Truth in Lending Act/Regulation Z Assessment

3. Truth in Lending Act/Regulation Z Interactive Policy Training

Edit and Distribute the Truth in Lending Act & Regulation Z Policy for Auto Dealers

Edit the policy

1. Click on the Library tab
2. Search for "Truth in Lending Act & Regulation Z Policy for Auto Dealers" and click on it
3. Click on the Edit button to view the list of versions
4. Click Create Draft to the right of the latest published version
5. Click Edit next to the Draft version that you just created
6. Make desired changes to the policy
7. Click Publish when you have finished editing the policy

Schedule the activity for distribution

1. Click on the Workspaces tab
2. Click on the Consumer Finance workspace
3. Click on the Truth in Lending Act/Regulation Z initiative
4. Click on Truth in Lending Act & Regulation Z Policy for Auto Dealers
5. Click on Groups and assign to the appropriate groups, such as management, controller, sales, finance and insurance and anyone who participates in a credit transaction.
6. Click on Schedule and set an annual schedule based on the Hire Date. We recommend that you set the Immediate Distribution option to Yes. 
7. Click Save

Distribute the Truth in Lending Act/Regulation Z Assessment

1. Click on the Workspaces tab
2. Click on the Consumer Finance workspace
3. Click on the Truth in Lending Act/Regulation Z initiative
4. Click on the Truth in Lending Act/Regulation Z Assessment
5. Click on Groups and assign to the appropriate groups, such as management, controller, sales, finance and insurance and anyone who participates in a credit transaction.
6. Click on Schedule and set an annual schedule based on the Hire Date. We recommend that you set the Immediate Distribution option to Yes. 
7. Click Save

Distribute the Truth in Lending Act/Regulation Z Interactive Policy Training

1. Click on the Workspaces tab
2. Click on the Consumer Finance workspace
3. Click on the Truth in Lending Act/Regulation Z initiative
4. Click on the Truth in Lending Act/Regulation Z Interactive Policy Training
5. Click on Groups and assign to the appropriate groups, such as management, controller, sales, finance and insurance and anyone who participates in a credit transaction.
6. Click on Schedule and set an annual schedule based on the Hire Date. We recommend that you set the Immediate Distribution option to Yes. 
7. Click Save