COLLEYVILLE, Texas -

The Association of Finance & Insurance Professionals offered some clarity in response to the Federal Reserve Board’s recent announcement regarding thresholds for the Truth in Lending Act as well as the Consumer Leasing Act.

AFIP executive director David Robertson explained that the $56,400 threshold will remain the same for 2016 as will the accepted practice for processing transactions in excess of that amount.

Robertson also emphasized the $54,600 maximum amount to qualify for installment sale and consumer lease protection under TILA and CLA, respectively, is not based on the selling price of the vehicle, but on the “amount financed” for a credit sale and the “total contractual obligation” for a lease.

“The total contractual obligation includes non-refundable amounts a lessee is contractually obligated to pay under the lease, but excludes the residual value, purchase option price and amounts such as taxes, license and registration fees collected by the lessor but paid to third parties,” Robertson said.

“However, most dealers treat all transactions as if they fall under TILA and CLA, regardless of the dollar amount involved,” he continued.

Under the two regulations, Robertson also mentioned a consumer transaction is one in which the vehicle is used “primarily” for household, family or personal use.

“Consumer transactions exceeding the $54,500 threshold may be recorded on a TILA compliant installment sale agreement or a Consumer Leasing Act compliant lease agreement,” he said.

If dealers have more questions or need further clarification, Robertson can be reached at afipdave@gmail.com. For information about AFIP, visit www.afip.com.