This topic only applies to companies who do amortized loans with an up-front or prepaid finance charge that, according to Regulation Z, must increase the finance charge and APR that appear in the Federal Truth in Lending disclosures.
It is important to understand the difference between a fee that does not fall under Regulation Z and one that does. In the title loan industry, the most common up-front fee is a title lien fee. Assuming that the lender charges the client only what the lender pays to file the title lien, this fee is not profit to the lender, and therefore it does not fall under Regulation Z. On the other hand, if the lender charges a fee that is profit to the lender, that fee may well fall under Regulation Z, and therefore it must increase the finance charge and APR on the contract. It is up to you to determine whether the fees you charge fall under Regulation Z. Title Loan Professional does not know whether your fees are paid to third parties or not, so the program will always default to assuming that fees are not Regulation Z fees. If a fee that you charge falls under Regulation Z, it is up to you to "inform" the program by following the steps below. Again, these instructions apply only to amortized loans, so if you have a non-amortized loan with a Regulation Z fee, please call us to make sure the program knows how to determine the APR on your contract.
In order to implement a Regulation Z fee, you must first set up the fee using Security, then Transactions. You will need to add a new transaction with the first seven characters being "Prepaid." For example, "Prepaid Origination Fee." This is not necessarily the description that will print on the contract. The word "Prepaid" is an internal trigger to the program that the fee itself is a finance charge that is being financed. The program will add the fee to the interest in the amortization schedule and adjust the APR on the contract accordingly. Please note that the higher the fee and the shorter the term of the loan, the more the contract APR will increase. When the prepaid fee transaction is set up, it must have a category of "Principal", a factor of one, the "Default Amount" should be blank, the "Apply To Cash Drawer" box should be unchecked, the "Places A Hold On The Account" box should be unchecked, and the "Administrators Only" box should be checked.
Once you have set up the new transaction, you will need to go to Tools, Company Setup, Title Loans and change the appropriate fee to the prepaid transaction. Then you should do some test loans and carefully check the contract and make sure that you agree with all the calculations. If you do one loan with a loan amount of X with the fee, then do another loan with the same amount X and same number of payments, changing the fee to zero on the Additional Information Fees and Interest tab, the APR on the contract without the fee should be lower. It's not a trivial task to make the contract "understand" which fees affect the APR, so it's important to test everything carefully before doing actual loans.
Per our contract with your company, it is you responsibility to make sure that you do not violate any federal, state or local regulations, so if you disagree with anything the program does, please let us know ASAP.