Borrower Rights and Responsibilities - Virgina CFA

CONSUMER FINANCE LENDING IN THE COMMONWEALTH OF VIRGINIA - BORROWER RIGHTS AND RESPONSIBILITIES

Please take the time to carefully review the information contained in this pamphlet. It is designed to advise you of your rights and responsibilities in connection with obtaining a consumer finance loan in Virginia.

If you have any questions about consumer finance lending or want additional information, you may contact the Virginia State Corporation Commission's Bureau of Financial Institutions toll-free at (800) 552-7945 or on the Internet at https://www.scc.virginia.gov/bfi.

In General: You are responsible for evaluating whether a consumer finance loan is right for you. Alternatives may include among other things less expensive short-term financing from another financial institution, family, or friends, a cash advance on a credit card, or an account with overdraft protection.

Certificate of Title / Other Security Interests: Prior to obtaining a consumer finance loan, you will be required to give a consumer finance lender the certificate of title for your motor vehicle. The consumer finance lender is required to record its lien with the motor vehicle department in the state where your motor vehicle is registered and hold the certificate of title until your loan is repaid or satisfied in full. Apart from your motor vehicle and any accessories that are attached to it, the consumer finance lender cannot take an interest in any other property you own as security for a consumer finance loan.

Interest and Other Loan Costs: In addition to interest, a consumer finance lender may charge you for the actual cost of recording its lien with the motor vehicle department in the state where your motor vehicle is registered.

If you make a payment more than seven calendar days after its due date, a consumer finance lender may impose a late charge of up to five percent of the amount of the payment.

Other than interest and costs specifically mentioned in this section and the section below (“Costs of Repossession and Sale”), no additional amounts may be directly or indirectly charged, contracted for, collected, received, or recovered by a consumer finance lender.

Costs of Repossession and Sale: A consumer finance lender may charge you for any reasonable costs that it incurs in repossessing, preparing for sale, and selling your motor vehicle if (i) you default on your consumer finance loan; (ii) the consumer finance lender sends you a written notice at least 10 days prior to repossession advising you that your consumer finance loan is in default and that your motor vehicle may be repossessed unless you pay the outstanding principal and interest; and (iii) you fail to pay the amount owed prior to the date of repossession. A consumer finance lender is prohibited from charging you for any storage costs if the consumer finance lender takes possession of your motor vehicle.

Written Loan Agreement: A consumer finance lender must provide you with a written loan agreement, which must be signed by both you and an authorized representative of the consumer finance lender. Your consumer finance loan agreement is a binding, legal document that requires you to repay your loan. Make sure you read the entire loan agreement carefully before signing and dating it.

Property Insurance: A consumer finance lender may require you to purchase or maintain property insurance for your motor vehicle. However, a consumer finance lender cannot require you to purchase or maintain property insurance from or through a particular provider or list of providers.

Using Consumer Finance Loan to Purchase Products or Services or Repay Other Loans:  A consumer finance lender is prohibited from making you a consumer finance loan so that you can purchase another product or service sold at the consumer finance lender's business location.  A consumer finance lender is also prohibited from making you a consumer finance loan so that you can repay another loan you may have from either the consumer finance lender or an affiliate of the consumer finance lender.

Right to Cancel:  You have the right to cancel your consumer finance loan at any time prior to the close of business on the next day the consumer finance lender is open following the date your loan is made by either returning the original loan proceeds check or paying the consumer finance lender the amount advanced to you in cash or by certified check, cashier’s check, money order or, if the consumer finance lender is equipped to handle such payments, by using a credit card. If you cancel your consumer finance loan, the consumer finance lender must mark your original loan agreement with the word "canceled" and return it to you along with your certificate of title.

Cash Payments / Partial Payments / Prepayments:  You have the right to receive a signed, dated receipt for each cash payment made in person, which will show the balance remaining on your consumer finance loan.

Additionally, you have the right to make a partial payment on your consumer finance loan at any time prior to its specified due date without penalty. However, a consumer finance lender may apply a partial payment first to any amounts that are due and unpaid at the time of such payment. If your consumer finance loan is current, a partial payment will reduce your outstanding balance as well as the total amount of interest that you will be required to pay.

You also have the right to repay your consumer finance loan in full before its specified maturity date without penalty by paying the consumer finance lender the total outstanding balance on your loan, including any accrued and unpaid interest and other charges that you may owe on your consumer finance loan.

Lender to Return Original Loan Agreement and Certificate of Title: Within 10 days after the date that you repay your consumer finance loan in full, the consumer finance lender must (i) mark your original loan agreement with the word “paid” or “canceled” and return it to you; (ii) take any action necessary to reflect the termination of its lien on your motor vehicle’s certificate of title; and (iii) return the certificate of title to you. If you have any questions or concerns regarding your certificate of title, you should contact the motor vehicle department in the state where your motor vehicle is registered.

Failure to Repay: Pay back your consumer finance loan! Know when your payments are due and be sure to repay your consumer finance loan on time and in full. IF YOU DO NOT REPAY YOUR CONSUMER FINANCE LOAN IN ACCORDANCE WITH YOUR LOAN AGREEMENT, THE CONSUMER FINANCE LENDER MAY REPOSSESS AND SELL YOUR MOTOR VEHICLE (see section below on “Repossession and Sale of your Motor Vehicle”).

In general, a consumer finance lender cannot seek a personal money judgment against you if you fail to pay any amount owed in accordance with your loan agreement. However, a consumer finance lender may seek a personal money judgment against you if you impair the consumer finance lender’s security interest by (i) intentionally damaging or destroying your motor vehicle; (ii) intentionally hiding your motor vehicle; (iii) giving the consumer finance lender a lien on a motor vehicle that has an undisclosed prior lien; (iv) selling your motor vehicle without the consumer finance lender’s written consent; or (v) securing another loan or obligation with a security interest in your motor vehicle without the consumer finance lender’s written consent.

In collecting or attempting to collect a consumer finance loan, a consumer finance lender is required to comply with restrictions and prohibitions applicable to debt collectors contained in the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., regarding harassment or abuse, false, misleading or deceptive statements or representations, and unfair practices in collections. A consumer finance lender is also prohibited from threatening or beginning criminal proceedings against you if you fail to pay any amount owed in accordance with your loan agreement.

Repossession and Sale of your Motor Vehicle: If you do not repay your consumer finance loan in accordance with your loan agreement, the consumer finance lender may repossess and sell your motor vehicle in order to recover any outstanding amounts that you owe.

If a consumer finance lender repossesses your motor vehicle, the consumer finance lender must send you a written notice at least 15 days prior to the sale of your motor vehicle.  The notice with contain (i) the date and time after which your motor vehicle may be sold; and (ii) a written accounting of the outstanding balance on your consumer finance loan, the amount of interest accrued through the date the consumer finance lender took possession of your motor vehicle, and any reasonable costs incurred to date by the consumer finance lender in connection with repossessing, preparing for sale, and selling your motor vehicle. At any time prior to the sale of your motor vehicle, you may obtain your motor vehicle by paying the consumer finance lender the total amount specified in the notice. Payment must be made in cash or by certified check, cashier’s check, money order or, if the consumer finance lender is equipped to handle such payments, by using a credit card.

Within 30 days of a consumer finance lender receiving funds from the sale of your motor vehicle, you are entitled to receive any surplus from the sale in excess of the sum of the following: (i) the outstanding balance on your consumer finance loan; (ii) the amount of interest accrued on your consumer finance loan through the date the consumer finance lender repossessed your motor vehicle; and (iii) any reasonable costs incurred by the consumer finance lender in repossessing, preparing for sale, and selling your motor vehicle.

See section above on “Costs of Repossession and Sale” for additional information regarding the conditions that must be met in order for a consumer finance lender to collect the reasonable costs of repossessing, preparing for sale, and selling your vehicle.

Violation of the Virginia Consumer Protection Act: Losses suffered as the result of a consumer finance lender’s violation of Chapter 15 of Title 6.2 of the Code of Virginia may be pursued under the Virginia Consumer Protection Act (§ 59.1-196 et seq. of the Code of Virginia), which in some cases permits consumers to recover actual and punitive damages.

Complaints and Contacting the Bureau of Financial Institutions: For assistance with any complaints you may have against a consumer finance lender, please contact the Bureau of Financial Institutions toll-free at 1 (800) 552-7945 or on the Internet at https://www.scc.virginia.gov/bfi. Complaints must be filed in writing with the Bureau of Financial Institutions. Complaints should be mailed to the Bureau of Financial Institutions, Attn: Complaints, P.O. Box 640, Richmond, Virginia 23218-0640, or faxed to the Bureau of Financial Institutions, Attn: Complaints, at (804) 371-9416.