Next year dealerships will have to comply with another disclosure requirement before they can extend financing to car buyers, thanks to federal rules completed before Christmas.
The Federal Reserve Board and Federal Trade Commission issued their final Risk-Based Pricing Rules on Dec. 22. The disclosure requirement is designed to educate consumers on the cost of financing, which is based largely on the customer's credit history. The rules apply to any lender that bases credit terms on a customer's credit score, including dealerships that arrange financing for customers.
The rule, which takes effect Jan. 1, 2011, will require dealerships to give their finance customers a written report showing their current credit score, the name of the credit reporting agency providing the score and either a bar graph or clearly worded statement telling customers how their scores rank against those of other U.S. consumers.