The federal Risk-Based Pricing Rule ("RBP Rule") imposes a new legal notice requirement on all creditors, including dealers, who use credit scores or other consumer report information to determine the cost of credit or the finance source to which a credit obligation will be sold. Compliance with the RBP Rule is mandatory as of January 1, 2011.
Risk-Based Pricing focuses on the typical three-party transaction that occurs at the dealership, i.e., one where the dealer and the buyer are the original parties to the retail installment sale contract, and where the dealer sells the contract to a third-party finance source. Dealers who arrange direct loans to be closed in the name of a bank or other direct lender will be instructed by the bank or lender regarding what, if any, RBP Rule obligations they have.
Risk-Based Pricing explains how and why the RBP Rule will affect dealers and the steps they can take to comply. It clarifies their obligations and is a resource for dealers, lawyers and other compliance managers to understand how to navigate the RBP Rule's substantive and procedural requirements.
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