3. AUTO SALES FINANCE ACT INCORPORATES THE ALL FEDERAL TRUTH IN LENDING ACT REQUIREMENTS/NOTICE REGARDING PREPAYMENT PENALTIES

The Rees-Levering Auto Sales Finance Act incorporates all of the requirements of the Federal Truth in Lending Act (TILA). Rees-Levering also requires disclosure if prepaying a loan will ultimately increase the cost of the loan. You can see how all the TILA disclosures must be made by clicking on the large yellow rectangle on the contract image to your left or by clicking here.

LINE 7 on the List of ITEMIZATION OF AMOUNT FINANCED and the exact AMOUNT FINANCED must be identical. the ANNUAL PERCENTAGE RATE (APR) is based on an interest-calculation standard that ALL banks/lenders/finance companies are required to disclose to a borrower; the "Actuarial Method". This allows a borrower to quickly compare the cost of borrowing from one lender to another. Using our loan calculator you can determine what the FINANCE CHARGE and MONTHLY PAYMENT will be. The APR be must accurate within 1/8 of 1 percent (.125 %).

Lenders, using a loan payment schedule called the "Sum of Digits" or "The Rule of '78's", can increase their rate of return if a borrower pays the loan off early. Our loan calculator can calculate the increased interest cost for any month of a loan. The difference is greatest right around the 1/3 point of the loan. NOTE: If a loan is repaid as originally schduled there is NO difference in the interest paid. The Sum of Digits/Rule of '78's Method increases the interest ONLY if the loan is paid off EARLY.

PREPAYMENT NOTICE: Reese Levering requires that the buyer must be informed if prepayment increases the cost of the loan. You can see how this disclosure must be worded by clicking on the small yellow rectangle on the contract image or clicking here.