Since 2011, the Risk-Based Pricing Rule for auto dealers has required dealerships that pull credit reports to evaluate a buyer’s credit worthiness, and to issue a notice to all buyers who request retail contract financing from them.
As every successful businessperson knows, running a business is in large measure based on the premise of balancing risk and reward.
First established by the Federal Reserve Board and the Federal Trade Commission as a means of improving the accuracy of credit reports, Risk-Based Exception Notices for car dealers are critical tools in finding that elusive balance between risk and reward, and improving the accuracy of credit reports.
Under the Risk-Based Pricing Rule for auto dealers, customers whose credit applications have been approved—albeit on materially less favorable terms—must be alerted to the existence of negative information in their credit reports; by doing so, this provides the customer with the opportunity to check the report for accuracy and correct any erroneous information.
As an industry leader, NCC’s solution to the requisite Risk-Based Exception Notices for car dealers replicates the methodologies adopted by the Federal Reserve and the FTC.
In addition, Risk-Based Exception Notices for auto dealers carries with them certain requirements. According to the Federal Trade Commission (FTC), in general, dealers must provide a risk-based exception notice if they “use a consumer report in connection with an application for — or grant of credit for — personal, family, or household purposes to someone on less favorable terms than you grant to others.
“Consumers are entitled to only one notice per transaction; they are entitled to another notice only if the APR increases during an account review.”
Parker Toyota, Parker Subaru, Parker Ford
D&M Leasing, Dallas/Ft. Worth/Houston
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