Book Opener

A BANK LOANRegulation Z requireslenders to disclose twoimportant things to youwhen you borrow money.With this information, youcan compare the cost of aloan from different lenders.What information mustlenders disclose to you?but before you realize it the total amount of money you owe may bemore than you can pay.Example 1. Antonia found a used truck that she liked, but shecouldn’t afford the monthly payments under a 24-month paymentplan. She bought the truck under a 36-month plan; however, twoyears later, the vehicle broke down completely and was not worthfixing. Antonia still had to make the monthly payments on thevehicle for a full year after it stopped working.A Federal Trade Commission (FTC) regulation gives consumersprotection when they buy vehicles on credit.Example 2. Chandra bought a used car from a local dealer. Shepaid $500 down and signed a contract to pay the balance of$5,500 plus interest in 24 monthly installments. The dealerreceived the $5,500 the same day by transferring the contract toa finance company under a prearranged agreement. Chandra wasthen required to pay the finance company the monthly payments,including interest, for the next 24 months.Under the FTC regulation, Chandra has the same protection againstthe finance company that she has against the car dealer. If somethingwent wrong with the car and the dealer refused to repair it, she could usethe breach of warranty of merchantability defense if sued by the financecompany for the debt. This rule does not apply if you borrow moneyto buy a car from a lending company that has no arrangement withthe seller.Chapter 16: Owning a Vehicle 339