Consumer Deposit
Consumer Lending
Real Estate Lending
Business Services
Closed-End
Consumer Lending
User Guide
P.O. Box 391
5910 Mineral Point Road
Madison, WI 53701-0391
Email: loanliner@cunamutual.com
MST907
© CUNA Mutual Group 2013 All Rights Reserved
Contents
Chapter 1: General Information
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 2: Consumer Loan and Security Agreements and Disclosure Statement (Paper)
Document Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Document Sample and Completion Instructions
Truth in Lending Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12
Itemization of Amount Financed Section . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-13
Voluntary Payment Protection Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Loan Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 16-18
Security Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 18-20
Chapter 3: Consumer Loan and Security Agreements and Disclosure Statement (Electronic)
Document Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Document Sample and Completion Instructions
Truth in Lending Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-27
Itemization of Amount Financed Section . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29
Loan Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28, 30-33
Security Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34-36
Chapter 4: Dwelling Fixed Loan and Security Agreements and Disclosure Statement
Document Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Document Sample and Completion Instructions
Truth in Lending Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38-41
Itemization of Amount Financed Section . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-43
Loan Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 44-45
Security Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46-48
Chapter 5: Dwelling Variable Loan and Security Agreements and Disclosure Statement
Document Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Document Sample and Completion Instructions
Truth in Lending Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-53
Itemization of Amount Financed Section . . . . . . . . . . . . . . . . . . . . . . . . . . . 54-55
Loan Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 56-60
Security Agreement Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61-63
Chapter 6: Variable Rate Sample Language . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Chapter 7: Sample Loans
Refinance Existing Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share Secured Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Automobile Purchase/Debt Payoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Variable Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Motorcycle Purchase, Car Given as Collateral, Cash Prepaid Finance Charge . . . . . . . . Mobile Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Sales Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Motorcycle Purchase, Financed Prepaid Finance Charge . . . . . . . . . . . . . . . . . . . Closed-End Consumer Lending User Guide
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73
77
81
85
89
94
97
Chapter 1:
General Information
Introduction
This Guide is designed to help you understand how to use the Closed-End LOANLINER® Consumer
and Consumer Dwelling Loan and Security Agreements and Disclosure Statement. The Loan and
Security Agreements are described in detail in this Guide, including instructions for completing the
document. This Guide also includes examples of loan transactions which may be helpful to you when
completing the loan documents at your credit union.
Service and Support
One of the key features of any product you use is the service and support that goes with it. You
can rely on LOANLINER Documents to provide you with excellent support and service for the
LOANLINER Closed-End Lending Documents. You can receive LOANLINER assistance by:
•Calling our team of operations and compliance experts at:
800.356.5012
• Contacting the LOANLINER Department at:
Phone: 800.356.5012
Fax: 608.236.6891
E-Mail: loanliner@cunamutual.com
Mail: LOANLINER Documents
PO Box 2991
Madison, WI 53701-2991
• Accessing the Compliance Resource Center at www.loanliner.com/compliance
Lending and Compliance Support
The LOANLINER program has been part of credit unions’ lending success for several decades and
LOANLINER products are currently being used by thousands of credit unions. You will have direct
access to this support via any of the channels described above.
Definition – Closed-End Credit
Regulation Z defines “closed-end credit” as consumer credit other than “open-end credit.” Closedend loans are those loans in which the credit union agrees to loan a certain amount to the borrower.
The borrower agrees to repay that amount over a stated period of time at an agreed upon interest
rate. The borrower cannot reborrow any portion that has been paid back.
LOANLINER Closed-End System
The LOANLINER Closed-End Lending Documents were designed exclusively for credit unions. We
developed our Loan Agreements so that they may be used to lend in all states. For credit unions that
do multi-state lending, be sure you are using the correct state specific document. Consumer notes
are available in either a fixed rate or fixed/variable rate version, whereas consumer dwelling notes
Closed-End Consumer Lending User Guide
1
are available in either a fixed or a variable format due to space constraints caused by the Closed-End
Interim Rules effective 1/30/2011. Several versions of the documents include filing copies, for use in
filing states. Refer to the chart on pages 3-4 for documents your credit union can order.
Resources
You have several resources at your disposal when using the LOANLINER Closed-End Lending
Documents. You can call the toll-free numbers shown previously to get help with compliance
questions and operational issues related to the documents. If you have questions about
administering the payment protection products members can elect when using LOANLINER
documents, you can call your local CUNA Mutual Group account representative.
In addition to the people available to help you, you can also rely on the resources listed below:
• User Guide. The User Guide provides the basics on how to use the LOANLINER documents. User Guides can be downloaded from the LOANLINER Lending Resource Center.
• M
iscellaneous Documents Guide. The Miscellaneous Documents Guide contains information
about all of the optional documents available with the LOANLINER program. The guide provides
document descriptions, samples, and completion instructions. Most of the documents described in
the Miscellaneous Documents Guide can be used for both open-end and closed-end lending.
Using this Guide
This User Guide is intended to be used as:
• A learning tool to understand the LOANLINER Closed-End Lending program.
• A reference tool once you begin using the documents on a regular basis.
The guide is intended to give you the basics on how to use the LOANLINER Closed-End Lending
program effectively in your credit union. If you need detailed assistance, you can rely on your local
CUNA Mutual Group account representative or the LOANLINER staff for expert help on using any of
the Closed-End Lending documents.
Types of Loans
The LOANLINER Closed-End Lending documents were designed to handle all types of credit
secured by personal property, but due to the Closed-End Interim Rules, our current series of
consumer notes can no longer be used for dwellings, including mobile homes. The rule affects all
closed-end real estate secured loans and closed-end loans secured by dwellings, such as mobile
homes, houseboats and other titled property considered a member’s dwelling, even if not the primary
residence. Closed-end loans subject to Regulation Z secured by a dwelling, even if considered
personal property under state law are affected.
In turn, we have created a series of consumer dwelling notes to be used for loans secured by real
estate or a dwelling. However, our documents are not designed for Government Insured Student
Loans.
We recommend you consult your attorney for proper documentation for these loans.
Closed-End Consumer Lending User Guide
2
VERSION
FORMAT
TYPE
1
MEDIA
TYPE
DOCUMENT
NUMBER
STATES USED IN
FILING
COPY
FILING
STATES
LOAN AND SECURITY AGREEMENT AND DISCLOSURE STATEMENTS (NOTES)
Right to Cure
Fixed / Variable Rate
P&E
NXRC1*
Colorado, DC, Kansas, Maine, Massachusetts,
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Fixed Rate
P&E
NXRC2*
Colorado, DC, Kansas, Maine, Massachusetts,
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Variable Rate
Consumer Dwelling
E
NXRC6*
Colorado, DC, Kansas, Maine, Massachusetts,
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Fixed Rate
Consumer Dwelling
E
NXRC4*
Colorado, DC, Kansas, Maine, Massachusetts,
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Continuous Feed
Fixed / Variable Rate
P
NXRC5*
olorado, DC, Kansas, Maine, Massachusetts,
C
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Single Premium
Fixed Rate
P
ZXRC2*
olorado, DC, Kansas, Maine, Massachusetts,
C
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Right to Cure
Single Premium
Continuous Feed
Fixed Rate
P
ZXRC5*
Colorado, DC, Kansas, Maine, Massachusetts,
Missouri, Nebraska, West Virginia and state
chartered credit unions lending to borrowers in
South Carolina
Yes
Colorado,
DC,
Nebraska
Florida
Fixed / Variable Rate
E
NXFL1*
Florida
No
Florida
Fixed Rate
E
NXFL2*
Florida
No
Florida
Variable Rate
Consumer Dwelling
E
NXFL6*
Florida
No
Florida
Fixed Rate
Consumer Dwelling
E
NXFL4*
Florida
No
Iowa
Fixed / Variable Rate
P&E
NXIA1*
Iowa
No
Iowa
Fixed Rate
P&E
NXIA2*
Iowa
No
Iowa
Variable Rate
Consumer Dwelling
E
NXIA6*
Iowa
No
Iowa
Fixed Rate
Consumer Dwelling
E
NXIA4*
Iowa
No
Iowa
Continuous Feed
Fixed / Variable Rate
P
NXIA5*
Iowa
No
Louisiana
Fixed / Variable Rate
P&E
NXLA1*
Louisiana
Yes
Louisiana
Louisiana
Fixed Rate
P&E
NXLA2*
Louisiana
Yes
Louisiana
Louisiana
Variable Rate
Consumer Dwelling
E
NXLA6*
Louisiana
Yes
Louisiana
Louisiana
Fixed Rate
Consumer Dwelling
E
NXLA4*
Louisiana
Yes
Louisiana
Louisiana
Continuous Feed
Fixed / Variable Rate
P
NXLA5*
Louisiana
Yes
Louisiana
Louisiana
Single Premium
Fixed Rate
P
ZXLA2*
Louisiana
Yes
Louisiana
Louisiana
Single Premium
Continuous Feed
Fixed Rate
P
ZXLA5*
Louisiana
Yes
Louisiana
* Document Version
1
Media Type = P (Paper), E (Electronic), or P & E (Both)
Closed-End Consumer Lending User Guide
3
VERSION
FORMAT
TYPE
1
MEDIA
TYPE
DOCUMENT
NUMBER
STATES USED IN
FILING
COPY
FILING
STATES
LOAN AND SECURITY AGREEMENT AND DISCLOSURE STATEMENTS (NOTES) (continued)
New Hampshire
Fixed / Variable Rate
P&E
NXNH1*
New Hampshire
No
New Hampshire
Fixed Rate
P&E
NXNH2*
New Hampshire
No
New Hampshire
Variable Rate
Consumer Dwelling
E
NXNH6*
New Hampshire
No
New Hampshire
Fixed Rate
Consumer Dwelling
E
NXNH4*
New Hampshire
No
New Hampshire
Single Premium
Fixed Rate
P
ZXNH2*
New Hampshire
No
New Hampshire
Single Premium
Continuous Feed
Fixed Rate
P
ZXNH5*
New Hampshire
No
Virginia
Fixed / Variable Rate
P&E
NXVA1*
Virginia
No
Virginia
Fixed Rate
Consumer Dwelling
E
NXVA4*
Virginia
No
Virginia
Variable Rate
Consumer Dwelling
E
NXVA6*
Virginia
No
Virginia
Continuous Feed
Fixed / Variable Rate
P
NXVA5*
Virginia
No
Wisconsin
Fixed / Variable Rate
P&E
NXWI1*
Wisconsin
Yes
Wisconsin
Fixed Rate
P&E
NXWI2*
Wisconsin
Yes
Wisconsin
Variable Rate
Consumer Dwelling
E
NXWI6*
Wisconsin
Yes
Wisconsin
Fixed Rate
Consumer Dwelling
E
NXWI4*
Wisconsin
Yes
Wisconsin
Continuous Feed
Fixed / Variable Rate
P
NXWI5*
Wisconsin
Yes
Wisconsin
Single Premium
Fixed Rate
P
ZXWI2*
Wisconsin
Yes
Wisconsin
Single Premium
Continuous Feed
Fixed Rate
P
ZXWI5*
Wisconsin
Yes
Standard
Fixed / Variable Rate
P&E
NXX01*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Fixed Rate
P&E
NXX02*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Variable Rate
Consumer Dwelling
E
NXX06*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Fixed Rate
Consumer Dwelling
E
NXX04*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Continuous Feed
Fixed / Variable Rate
P
NXX05*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Single Premium
Fixed Rate
P
ZXX02*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
Standard
Single Premium
Continuous Feed
Fixed Rate
P
ZXX05*
All other states plus federally chartered
credit unions lending to borrowers in
South Carolina
Yes
Arkansas, Ohio,
South Dakota,
Wyoming
* Document Version
1
Media Type = P (Paper), E (Electronic), or P & E (Both)
Closed-End Consumer Lending User Guide
4
Differences Between the Versions
Standard – This version is for those states that do not require a right to cure notice be given before
calling the borrower in default.
Right to Cure – This version is for those states that require a right to cure notice be given before
calling the borrower in default.
Florida – This version is used exclusively in Florida when the lender does not want the loan
transaction to be subject to the Florida Documentary Stamp Tax under Section 208.08(1)(a) of the
Florida Statues. Under limited circumstances, the loan transaction may still be subject to the tax
under 208.08(1)(b) F.S. if the credit union files a UCC filing statement or records a similar evidence
of indebtedness within the state of Florida.
Iowa – Iowa is a right to cure state and has different default language. Iowa law also requires that a
special notice be given in the signature language for closed-end loans.
Louisiana – Louisiana has special security agreement language.
New Hampshire – New Hampshire law has special requirements for car loans which are included in
this version.
Virginia – This version is for Virginia due to credit insurance requirements.
Wisconsin – Wisconsin has special default provisions and security agreement language. Wisconsin
law also requires that a special notice be given in the signature language for closed-end loans.
Closed-End Consumer Lending User Guide
5
Chapter 2:
Consumer Loan and Security Agreements and
Disclosure Statement
Document Description – Paper format
When Used:
This document is used when a borrower has been approved for a
closed-end loan. It is used to document the transaction. The documents
are available for fixed rate loans only or for fixed/variable rate loans.
Purpose:
Loan and Security Agreements and Disclosure Statement provide:
1. disclosures required by Regulation Z.
2. contract terms between the credit union and the borrower(s).
3. Voluntary Payment Protection.
All Truth in Lending disclosures are given in the “Fed Box” area, which
is outlined in red. The Loan Agreement and Security Agreement are
separate agreements.
Document Number:
NXX01*
How distributed:
A copy of this document must be given to a borrower (if joint borrowers,
only one needs to receive a copy).
Components:
Part 1 - Credit union copy of Loan & Security Agreements & Disclosure
Statement
Part 2 - Borrower copy of Loan & Security Agreements & Disclosure
Statement
Part 3 - Filing copy, if applicable
Part 4 - Borrower’s copy of Voluntary Payment Protection
Imprinting:
Required for Voluntary Payment Protection.
Optional - Credit union’s name, address, telephone number, logo and
late charges.
State-specific
versions:
Iowa, Louisiana, New Hampshire, Right to Cure, Virginia, and Wisconsin
*Indicates spaceholder for version number
Closed-End Consumer Lending User Guide
6
Page 1 sample
Thank You For Borrowing At Your Credit Union
1
FixedRate
2
VariableRate
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
LoanDate
LoanNumber
3
Borrower1NameandAddress
AccountNumber
4
5
Borrower2Name(andaddressifdifferentfromBorrower1)
6
6
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
7
% $ 8
Filing Fees
Non-Filing Insurance
$ 12
$ 13
$ 9
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
$ 10
$
11
which includes your downpayment of
$
Variable Rate:
14
15
16
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ 17
Late Charge: 18
Your Payment
Schedule will be:
Number of Payments
Amount of Payments
When Payments Are Due
19
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property / Model / Make
Year
I.D. Number
Type / Lien Amount
Value
Key Number
20
Other (Describe):
Pledge of Shares $
in Account Number
$
in Account Number 21
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$ 22
$ 23
$
$
Amount Paid to Others
on Your Behalf
26
LOAN AGREEMENT
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
Prepaid Finance Charge
$ 24
$ 25
$
To
IFANAMOUNTISMARKEDWITHANASTERISK(
$
To
*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
To
To
27
continued on reverse side
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
1. Promise to Pay: You promise to pay $ to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
loans the interest rate is 28
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
in Lending Disclosure. The initial interest rate is
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection Costs: 29
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X
X
OTHERBORROWER
X
(SEAL)
BORROWER1
DATE
BORROWER2
DATE
WITNESS
DATE
X
(SEAL)
OWNEROFPROPERTY
(SEAL)
CREDITINSURANCEENROLLMENTFORM/SCHEDULE
OTHERBORROWER
(SEAL)
OWNEROFPROPERTY
WITNESS
DATE
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
• You are eligible for disability insurance only if you are working for wages
“You’’ or “Your’’ means the member and the joint insured (if applicable).
or profit for 25 hours a week or more on the date of any advance. If you
Credit
insurance is voluntary
and not required Lending
in order to obtain
this loan.
Closed-End
Consumer
User
Guide
are not, that particular advance will not be insured until you return to
You may select any insurer of your choice. You can get this insurance only
work. If you are off work because of temporary layoff, strike or vacation,
if you check the “yes’’ box below and sign your name and write in the date.
but soon to resume, you will be considered at work.
The rate you are charged for the insurance is subject to change. You will
7
Page 1 instructions
Please refer to the document on the preceding pages for the corresponding numbers.
1.Credit Union Information – This space is used to identify the credit union as required by
Regulation Z, Section 1026.18(a). If your credit union name, address, telephone number and
logo were not imprinted by CUNA Mutual Group, enter the applicable information here.
2.Fixed/Variable Rate – Check “Fixed Rate” box, if loan is a fixed rate loan. Check “Variable Rate”
box if loan is a variable rate loan. If credit union doesn’t offer variable rate loans, notes for fixed
rate only loans are available.
3. Loan Date – Date of current loan.
4.Loan Number – Loan identification number as defined by the credit union.
5. Account Number – Member account number.
6.Borrower 1 Name and Address/Borrower 2 Name and Address – Name and address of each
borrower.
Truth in Lending Disclosure Section
The Truth in Lending Act requires certain disclosures be segregated from other information on a
closed-end lending document per Regulation Z, Section 1026.17(a). The area labeled “Truth in
Lending Disclosure” is outlined in red and is referred to as the “Fed Box.” The Truth in Lending
Disclosure contains the following items:
7.Annual Percentage Rate – Your credit union completes the annual percentage rate (APR) for
the loan requested, Regulation Z, Sections 1026.18(e) and 1026.22.
Note: The APR will be the simple interest rate when the only finance charge is interest. If finance
charges other than interest are to be included, the APR will be different than the simple interest
rate and must be calculated using a calculation device sufficiently sophisticated to correctly
compute the correct APR. Examples of finance charges on consumer loans include:
a) credit report fees
b) loan processing fees
c) mandatory residual value insurance (RVI)
d) mandatory guaranteed asset protection (GAP) coverage
8.Finance Charge – Your credit union completes the total finance charge for the loan as required
by Regulation Z, Section 1026.18(d).
Note: Any prepaid finance charge should be included in this amount. Do not put an ‘e’ for
estimate in this box. The Disclosure should be completed with the total finance charge known at
the time of disclosure.
Closed-End Consumer Lending User Guide
8
Page 1 instructions (continued)
9. Amount Financed – Regulation Z, Section 1026.18(b) requires that the amount financed be
calculated in the following way:
a) Start with the principal loan amount.
b)Add other amounts that are financed by the lender and are not part of the finance charge.
Level rate and monthly renewable credit insurance is not financed; therefore, the cost for
this insurance should not be included in the “Amount Financed” section. Single premium
insurance is financed and will be included in this amount.
c) Subtract any prepaid finance charge.
10.Total of Payments – The sum of the payments for the loan. Regulation Z, Section 1026.18(h).
The total of payments should equal the sum of the payments reflected in the payment schedule.
For example: If the payment schedule has 36 payments of $100.00, the total of payments would
show $3,600.00. The total of payments can include amounts that are not included in the finance
charge or amount financed, such as credit life and credit disability insurance. It is not necessary
to put an ‘e’ for estimate in this box. The Loan and Security Agreements and Disclosure
Statement should be completed with the total payments known at the time the disclosure is
prepared.
11.Total Sales Price – Regulation Z, Section 1026.18(j) requires this disclosure be used whenever
your credit union is both the seller and the creditor. This is most likely to happen when you are
selling a repossessed vehicle. In this section you must disclose both the total sales price and the
down payment amount, if any. The total sales price is the sum of the:
a) cash price
b) amounts that are financed but not finance charges
c) finance charges
12.Filing Fees – If you pass on the cost of filing fees (for example, a lien filing fee) to borrowers,
whether directly or indirectly, you must disclose the cost — even if the borrower pays the fee in
cash to the credit union or a third party. This fee is not a finance charge if you only pass on the
actual cost charged by government officials, Regulation Z, Section 1026.18(o).
13.Non-Filing Insurance – Enter the dollar amount of the non-filing insurance. This insurance
premium is used to perfect the lien in lieu of actually filing the security interest, Regulation Z,
Section 1026.18(o).
Closed-End Consumer Lending User Guide
9
Page 1 instructions (continued)
14.Variable Rate – The definition of a variable rate loan for closed-end credit is any loan that can
increase after consummation in a transaction not secured by the consumer’s principal dwelling.
The Loan and Security Agreement is designed to handle all types of credit secured by personal
property. There are many types of variable rate closed-end transactions and they generally fall
into one of the following categories:
a)Changes that follow an external index such as the Prime Rate, Treasury Bill Rates, Eleventh
District Cost of Funds, Treasury Securities, etc. These are indexes that are set up by some
agency or group other than the credit union and are generally published in The Wall Street
Journal, the financial pages of many local newspapers and the Federal Reserve Statistical
Release and Federal Reserve Board Bulletin.
b)Changes that follow an external index that are beyond the control of the credit union such
as the rate charged by another local financial institution: e.g., the fixed rate charged by XYZ
Financial for 30-year fixed rate mortgages. These rates generally are not officially published
like the indices described in (a.) above, but they are beyond the control of the credit union.
c)Changes that follow an internal index of the credit union. An example would be the credit
union’s rate on 6-month certificates or the dividend rate paid on share accounts.
d)Changes in the rate that are based entirely on the discretion of the credit union’s board of
directors. At any particular time the board of directors can decide that the interest rate will
change on existing loans.
e)Changes that are tied to some event or occurrence. Common occurrences in credit union
loans which trigger an interest rate increase include: (a) when an employee leaves the
employment of the credit union, (b) discontinuing payroll deduction or automatic payment, (c)
failure to maintain minimum account balances, or (d) failure to maintain certain services.
f)A renewable balloon payment when (1) the credit union is unconditionally obligated to
renew the balloon payment loan at the consumer’s option or subject to conditions within the
consumer’s control and (2) the credit union has the option of increasing the interest rate at
the time of renewal of the balloon.
Closed-End Consumer Lending User Guide
10
Page 1 instructions (continued)
REQUIRED DISCLOSURES FOR VARIABLE RATE LOANS
The following disclosures must appear in this section of the document:
• The Circumstances Under Which the Rate May Increase
SAMPLE LANGUAGE:
The APR may increase during the term of this transaction if:
[the prime interest rate of (creditor) increases.]
[the balance in your deposit account falls below $__________.]
[you terminate your employment with (employer).]
• Any Limitation on the Increase
SAMPLE LANGUAGE:
[The interest rate will not increase above ______%.]
[The maximum interest rate increase at one time will be _____%.]
[The rate will not increase more than once every (time period).]
• The Effect of an Increase
SAMPLE LANGUAGE:
Any increase will take the form of:
[higher payment amounts.]
[more payments of the same amount.]
[a larger amount due at maturity.]
• An Example of the Payment Terms that would Result from an Increase
The example must be either a standard example that illustrates the terms and conditions of
the type of credit offered by the credit union or it may directly reflect the terms and conditions
of the particular transaction.
In addition to the Truth in Lending Disclosures, you must also explain any other terms of
the variable rate which are directly related. These include: the margin, interest rate floors,
rounding of index values or payments.
15.Prepayment – Regulation Z, Section 1026.18(k) requires disclosure of any prepayment penalty.
The language in the LOANLINER documents prohibits a prepayment penalty.
16. Required Deposit – Per Regulation Z, Section 1026.18(r) and footnote 45, this language is
required when the borrower must maintain a deposit as a condition of the loan.
17.Property Insurance – If your credit union sells property insurance, enter the amount of the
insurance premium. The term of the insurance must also be disclosed if it is less than the term of
the loan, Regulation Z, Section 1026.18(n).
Closed-End Consumer Lending User Guide
11
Page 1 instructions (continued)
18.Late Charge – The late charge is any dollar or percentage charge that may be imposed before
maturity because of a late payment. This language is provided by the credit union and may be
printed on the documents, Regulation Z, Section 1026.18(l).
19.Payment Schedule – Enter number, amount(s), and due date(s) of payments, Regulation Z,
Section 1026.18(g). If credit insurance is elected, the premium is included in the payment amount.
20.Security – The statement “Collateral securing other loans with the credit union may also secure
this loan” is printed to disclose the existence of a cross collateral and future advance clause in
the Security Agreement. The statement “You are giving a security interest in your shares and
dividends and, if any, your deposits and interest in the credit union; and the property described
below:” discloses that shares/deposits are also offered to secure the loan. The description of the
collateral must be included here since this portion of the Truth in Lending Disclosure also is part
of the Security Agreement. A complete description of collateral should be shown. Also, additional
security offered should be disclosed in the “other” field. For “Pledge of Shares,” enter the amount
and account number for share secured loans.
21.Contract Reference – This is a statement, per Regulation Z, Section 1026.18(p), that
the consumer should refer to the appropriate contract documents for information about
nonpayment, default, prepayment penalties, and rebates.
Itemization of Amount Financed Section
22.Itemization of Amount Financed – Enter amount the borrower financed per Regulation Z,
Section 1026.18(c). This is the amount shown in the “Amount
Financed” box.
23.Amount Given to You Directly – Enter the amount of money given to the borrower in the form
of cash or a check, as well as funds placed in an asset account. (Asset accounts include, but are
not limited to, share accounts, share draft accounts, etc.)
Note: If a check is made out to the borrower and another party, this amount is to be included in
this box. You don’t have to show the other party in the section “Amounts Paid to Others on your
Behalf,” Regulation Z, Official Staff Interpretation, paragraph 18(c)(1)(i) - 1. Amounts paid to
Consumer.
24. Amount Paid on Your Account – This is the amount your credit union will use to pay off
an existing loan balance. This section would include a payment of an existing loan balance
(principal and accrued interest) on a prior loan. Only amounts paid to loan accounts should be
shown here, Regulation Z, Section 1026.18(c)(1)(ii).
25.Prepaid Finance Charge – Prepaid finance charges include any portion of the finance charge
paid prior to or at closing or settlement. They may be paid in cash or financed and withheld
from the proceeds. Some common examples include: service fees, loan fees, loan guarantee
insurance, credit report fees, residual value insurance, and mandatory GAP coverage. Prepaid
finance charges are subtracted from the amount financed and added to the finance charge for
disclosure purposes. This will result in an APR that is different than the contractual interest rate.
Closed-End Consumer Lending User Guide
12
Page 1 instructions (continued)
26.Amount Paid to Others on Your Behalf – These boxes are provided to disclose amounts
paid to other persons by the credit union on the borrower’s behalf. These persons must be
identified by name except that payments to government agencies, public officials, credit report
agencies, appraisers and insurance companies may be generically identified with phrases like
“credit bureau” or “state agency.” If loan checks are made payable to a third party only, and not
the borrower, the amount of the payment and the name of the third party must be disclosed,
Regulation Z, Section 1026.18(c)(1)(iii).
Note: The level rate or monthly renewable credit disability/credit life costs or amounts need not
be disclosed in this section.
This section includes a sentence which reads as follows: If an amount is marked with an
asterisk(*), we will be retaining a portion of the amount. An asterisk should be used whenever
the borrower is financing a product for which the credit union imposes an “upcharge.” Typically,
if the credit union sells mechanical repair coverage (MRC) or extended warranties and retains
a portion of the amount, then an asterisk will be needed. An example would be if the borrower
purchased an extended warranty from the credit union. The warranty may cost the credit union
$300.00, but the credit union charges the borrower $400.00. The $100.00 difference is an
“upcharge” on this product. The credit union needs to disclose that it is retaining a portion of the
$400.00 that is being charged to the borrower.
27.Consumers’ Claims and Defenses Notice – Whenever your credit union is selling a
repossessed vehicle and financing it, the checkbox for the “Consumers’ Claims and Defenses
Notice” should be checked. The Consumers’ Claims and Defenses Notice may also be required
in situations where the credit union has a business relationship with the seller of goods. The
notice appears in the Security Agreement.
Loan Agreement Section
28.Promise to Pay – This is the contractual promise to repay the principal loan amount plus
interest. Your credit union should put the note interest rate here as well as the principal amount
borrowed. If this is a variable rate loan, the initial interest rate is entered here. The contractual
interest rate used to amortize the loan may be different than the APR if there are prepaid finance
charges as part of the loan. The sample shows the fixed/variable promise to pay language. The
fixed rate language is as follows: You promise to pay $______ to the credit union plus interest
on the unpaid balance until what you owe has been repaid. For fixed rate loans the interest rate
is ______% per year.
29.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are to be disclosed. This language may be imprinted.
Closed-End Consumer Lending User Guide
13
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Itemization of Amount Financed of
Amount Given to You Directly
Amount Paid on Your Account
$
$
$
$
$
Amount Paid to Others
on Your Behalf
LOAN AGREEMENT
Prepaid Finance Charge
$
$
To
IFANAMOUNTISMARKEDWITHANASTERISK(
$
To
*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
To
To
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
continued on reverse side
1. Promise to Pay: You promise to pay $ to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
loans the interest rate is
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
in Lending Disclosure. The initial interest rate is
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection Costs:
Page 1 (Signature section) sample
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
30 VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X
31
DATE
X
X
(SEAL)
BORROWER1
OWNEROFPROPERTY
DATE
WITNESS
32 “You’’ or “Your’’ means the member and the joint insured (if applicable).
YES
NO
OTHERBORROWER
PREMIUM SCHEDULE
$
$
$
a
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM/SCHEDULE
YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
COVERED MEMBER (Please Print)
e
b
e
e
d
e Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
JOINTINSURED’SDATEOFBIRTH
c
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
f
X
X
g
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
DATE
h
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
14
Page 1 (Signature section) instructions
30. Signature Section – This area contains signature language that will vary on some documents
due to state law variations.
31.Borrower’s Signature – The borrower signs, or otherwise authenticates the Loan and Security
Agreements and Disclosure Statement in this area. Additional signatures may be obtained using
these areas. By signing, or otherwise authenticating as a borrower, a person is agreeing to the
Loan and Security Agreements. If the owner of the collateral is not a borrower, the box “Owner
of Collateral” should be checked. (This is the ONLY situation when this box should be checked.)
The owner of collateral is agreeing only to the terms of the Security Agreement. A witness may
also sign here. A witness signature is not required under the Truth in Lending Act.
Voluntary Payment Protection Section
32.Credit Insurance Enrollment Form/Schedule – The enrollment section on the documents you
are using may look different than it appears on the sample.
Note: Credit insurance enrollment will not be available on this form in all states.
a)Coverage(s) - The borrower must check whether or not coverage is desired. The coverage(s)
offered by your credit union will be automatically imprinted by CUNA Mutual Group.
b) Premium Schedule - The total estimated premium for each coverage elected by the
borrower must be calculated and disclosed in this section according to Regulation 1026.4(d)
(1)(ii) of Regulation Z.
c)Insurance Maximums - The coverage maximums applicable to your credit union will be
disclosed in this section. These are automatically imprinted by CUNA Mutual Group.
d) Blank Area - If your credit union has special contract provisions, they will be imprinted here
by CUNA Mutual Group.
e)Waiting Period - If your credit union has Credit Disability coverage, this section will be
imprinted by CUNA Mutual Group.
f) S
econdary Beneficiary - If the borrower wishes to name a secondary beneficiary who would
receive any excess proceeds from an insurance benefit, it should be done in this box. The
borrower is not required to name a secondary beneficiary. The borrower or credit union may
complete this information.
g) Signature of Borrower - Section 1026.4(d)(1)(iii) of Regulation Z requires the borrower’s
signature if credit insurance is elected. While Regulation Z only requires a signature if the
borrower elects insurance, we recommend a signature always be obtained whether insurance
is elected or not. Therefore, the borrower signs, or otherwise authenticates in this space
electing or not electing insurance.
Your credit union must also obtain the borrower’s date of birth. This information is required to
determine the member’s eligibility for coverage.
h) Signature of Co-Borrower - This signature is obtained ONLY when joint credit life insurance
is elected. A co-borrower is eligible for joint credit life only if they have signed the Loan and
Security Agreements and Disclosure Statement.
Your credit union must also obtain the date of birth of the co-borrower to determine eligibility
for joint credit life insurance coverage.
Closed-End Consumer Lending User Guide
15
Page 2 sample
LOAN AGREEMENT
In this Loan Agreement (“Agreement”), which begins on the reverse side, all
references to “Credit Union,” “we,” “our,” or “us,” mean the Credit Union whose
name appears on this document and anyone to whom the Credit Union assigns
or transfers this Agreement. All references to “you” or “your” mean each person
who signs, or otherwise authenticates, this Agreement as a borrower.
33 4. PAYMENTS — You promise to make payments of the amount and at the time
shown in the Truth in Lending Disclosure. If this is a variable rate loan, the Truth
in Lending Disclosure section tells you whether, if the interest rate increases, you
will have to make more payments, higher payments, or if the final payment will
be a balloon payment. You may prepay any amount without penalty. If you prepay
any part of what you owe, you are still required to make the regularly scheduled
payments, unless we have agreed to a change in the payment schedule. Because
this is a simple interest loan, if you do not make payments exactly as scheduled,
your final payment may be more or less than the amount of the final payment that
is disclosed. If you elect voluntary payment protection, we will either include the
premium or program fee in your payments or extend the term of your loan. If the
term is extended, you will be required to make additional payments of the
scheduled amount, until what you owe has been paid. You promise to make all
payments to the place we choose. If this loan refinances another loan we have
with you, the other loan will be canceled and refinanced as of the date of this
loan. Unless otherwise required by law, payments will be applied to amounts
owed in the manner we choose.
34
5. LOAN PROCEEDS BY MAIL — If the proceeds of this loan are mailed to you,
interest on this loan begins on the date the loan proceeds are mailed to you.
6. SECURITY FOR LOAN — This Agreement is secured by all property described
in the “Security” section of the Truth in Lending Disclosure. Property securing other
loans you have with us also secures this loan, unless the property is a dwelling. In
addition to your pledge of shares, we may also have what is known as a statutory
lien on all individual and joint accounts you have with us. A statutory lien means
we have the right under federal law and many state laws to claim an interest in
your accounts. We can enforce a statutory lien against your shares and dividends,
and if any, interest and deposits, in all individual and joint accounts you have
with us to satisfy any outstanding financial obligation that is due and payable to
us. We may exercise our right to enforce this lien without further notice to you,
to the extent permitted by law. For all borrowers: You pledge as security for this
loan all shares and dividends and, if any, all deposits and interest in all joint and
individual accounts you have with the Credit Union now and in the future. The
statutory lien and/or your pledge will allow us to apply the funds in your
account(s) to what you owe when you are in default. The statutory lien and
your pledge do not apply to any Individual Retirement Account or any other
account that would lose special tax treatment under state or federal law if given
as security.
36 7. DEFAULT — You will be in default under this Agreement if you do not make
35
a payment of the amount required on or before the date it is due. You will be in
default if you break any promise you made in connection with this loan or if
anyone is in default under any security agreement made in connection with this
Agreement. You will be in default if you die, file for bankruptcy, become insolvent
(that is, unable to pay your bills and loans as they become due), or if you made
any false or misleading statements in your loan application. You will also be in
default if something happens that we believe may seriously affect your ability to
repay what you owe under this Agreement or if you are in default under any
other loan agreement you have with us.
8. ACTIONS AFTER DEFAULT — When you are in default, we may demand
immediate payment of the entire unpaid balance under this Agreement. You waive
any right you have to receive demand for payment, notice of intent to demand
immediate payment and notice of demand for immediate payment. If we demand
immediate payment, you will continue to pay interest at the rate provided for in
this Agreement, until what you owe has been repaid. We will also apply against
what you owe any shares and/or deposits given as security under this Agreement.
We may also exercise any other rights given by law when you are in default.
9. EACH PERSON RESPONSIBLE — Each person who signs, or otherwise
authenticates, this Agreement will be individually and jointly responsible for
paying the entire amount owed under this Agreement. This means we can enforce
our rights against any one of you individually or against all of you together.
10. LATE CHARGE — If you are late in making a payment, you promise to pay
the late charge shown in the Truth in Lending Disclosure. If no late charge is
shown, you will not be charged one.
11. DELAY IN ENFORCING RIGHTS — We can delay enforcing any of our rights
under this Agreement any number of times without losing the ability to exercise
our rights later. We can enforce this Agreement against your heirs or legal
representatives.
12. CONTINUED EFFECTIVENESS — If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in effect.
13. NOTICES — Notices will be sent to you at the most recent address you have
given us in writing. Notice to any one of you will be notice to all.
14. USE OF ACCOUNT — You promise to use your account for consumer
(personal, family or household) purposes, unless the Credit Union gives you
written permission to use the account also for agricultural or commercial
purposes, or to purchase real estate.
15. NO ORAL AGREEMENTS — THIS NOTE CONSTITUTES A “WRITTEN LOAN
AGREEMENT” PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, IF SUCH SECTION APPLIES. THIS WRITTEN LOAN
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
37
38
39
40
41
42
43
44
SECURITY AGREEMENT
45
46
47
48
49
50
In this Agreement all references to “Credit Union,” “we,” “our” or “us” mean the
Credit Union whose name appears on this document and anyone to whom the
Credit Union assigns or transfers this Agreement. All references to the “Loan”
mean the loan described in the Loan Agreement that is part of this document.
All references to “you” or “your” mean any person who signs, or otherwise
authenticates, this Agreement.
1. THE SECURITY FOR THE LOAN — You give us what is known as a security
interest in the property described in the “Security” section of the Truth in
Lending Disclosure that is part of this document (“the Property”). The security
interest you give includes all accessions. Accessions are things which are
attached to or installed in the Property now or in the future. The security interest
also includes any replacements for the Property which you buy within 10 days
of the Loan and any extensions, renewals or refinancings of the Loan. It also
includes any money you receive from selling the Property or from insurance you
have on the Property. If the value of the Property declines, you promise to give
us more property as security if asked to do so.
2. WHAT THE SECURITY INTEREST COVERS/CROSS COLLATERAL PROVISIONS — The security interest secures the Loan and any extensions, renewals
or refinancings of the Loan. The security interest also secures any other loans,
including any credit card loan, you have now or receive in the future from us
and any other amounts you owe us for any reason now or in the future, except
any loan secured by your principal dwelling. If the Property is household
goods as defined by the Federal Trade Commission Credit Practices Rule or your
principal dwelling, the Property will secure only this Loan and not other loans or
amounts you owe us.
3. OWNERSHIP OF THE PROPERTY — You promise that you own the Property
or, if this Loan is to buy the Property, you promise you will use the Loan proceeds
for that purpose. You promise that no one else has any interest in or claim against
the Property that you have not already told us about. You promise not to sell or
lease the Property or to use it as security for a loan with another creditor until the
Loan is repaid. You promise you will allow no other security interest or lien to
attach to the Property either by your actions or by operation of law.
4. PROTECTING THE SECURITY INTEREST — If your state issues a title for
the Property, you promise to have our security interest shown on the title. We
may have to file what is called a financing statement to protect our security
interest from the claims of others. You irrevocably authorize us to execute
(on your behalf), if applicable, and file one or more financing, continuation or
amendment statements pursuant to the Uniform Commercial Code (UCC) in a
form satisfactory to us. You promise to do whatever else we think is necessary
to protect our security interest in the Property. You also promise to pay all costs,
including but not limited to any attorney fees, we incur in protecting our security
interest and rights in the Property, to the extent permitted by applicable law.
5. USE OF PROPERTY — Until the Loan has been paid off, you promise you
will: (1) Use the Property carefully and keep it in good repair. (2) Obtain our
written permission before making major changes to the Property or changing
the address where the Property is kept. (3) Inform us in writing before changing
your address. (4) Allow us to inspect the Property. (5) Promptly notify us if the
Property is damaged, stolen or abused. (6) Not use the Property for any
unlawful purpose. (7) Not retitle property in another state without telling us.
6. PROPERTY INSURANCE, TAXES AND FEES — You promise to pay all taxes
and fees (like registration fees) due on the Property and to keep the Property
insured against loss and damage. The amount and coverage of the property
insurance must be acceptable to us. You may provide the property insurance
through a policy you already have, or through a policy you get and pay for. You
promise to make the insurance policy payable to us and to deliver the policy or
proof of coverage to us if asked to do so.
If you cancel your insurance and get a refund, we have a right to the refund. If
the Property is lost or damaged, we can use the insurance settlement to repair
the Property or apply it towards what you owe. You authorize us to endorse any
draft or check which may be payable to you in order for us to collect any refund
or benefits due under your insurance policy.
If you do not pay the taxes or fees on the Property when due or keep it insured,
we may pay these obligations, but we are not required to do so. Any money we
spend for taxes, fees or insurance will be added to the unpaid balance of the
Loan and you will pay interest on those amounts at the same rate you agreed to
pay on the Loan. We may receive payments in connection with the insurance
from a company which provides the insurance. We may monitor our loans for
the purpose of determining whether you and other borrowers have complied
with the insurance requirements of our loan agreements or may engage others
to do so. The insurance charge added to the Loan may include (1) the insurance
company’s payments to us and (2) the cost of determining compliance with the
insurance requirements. If we add amounts for taxes, fees or insurance to the
unpaid balance of the Loan, we may increase your payments to pay the amount
added within the term of the insurance or term of the Loan.
7. INSURANCE NOTICE — If you do not purchase the required property
insurance, the insurance we may purchase and charge you for will cover only
our interest in the Property. The premium for this insurance may be higher
because the insurance company may have given us the right to purchase
insurance after uninsured collateral is lost or damaged. The insurance will not
be liability insurance and will not satisfy any state financial responsibility or
no fault laws.
8. DEFAULT — You will be in default if you break any promise you make or fail
to perform any obligation you have under this Agreement. You will be in default
if any property you have given us as security is repossessed by someone else,
seized under a forfeiture or similar law, or if anything else happens that
significantly affects the value of the Property or our security interest in it. You
will also be in default under this Agreement if the Loan is in default.
9. WHAT HAPPENS IF YOU ARE IN DEFAULT — When you are in default, we
may demand immediate payment of the outstanding balance of the Loan without
giving you advance notice and take possession of the Property. You agree the
Credit Union has the right to take possession of the Property without judicial
process if this can be done without breach of the peace. If we ask, you promise
to deliver the Property at a time and place we choose. If the Property is a motor
vehicle or boat, you agree that we may obtain a key or other device necessary to
unlock and operate it, when you are in default. We will not be responsible for any
other property not covered by this Agreement that you leave inside the Property
or that is attached to the Property. We will try to return that property to you or
make it available for you to claim.
After we have possession of the Property, we can sell it and apply the money to
any amounts you owe us. We will give you notice of any public disposition or
the date after which a private disposition will be held. Our expenses for taking
possession of and selling the Property will be deducted from the money received
from the sale. Those costs may include the cost of storing the Property,
preparing it for sale and attorney’s fees to the extent permitted under state law
or awarded under the Bankruptcy Code.
If you have agreed to pay the Loan, you must pay any amount that remains
unpaid after the sale money has been applied to the unpaid balance of the Loan
and to what you owe under this Agreement. You agree to pay interest on that
amount at the same rate as the Loan, until that amount has been paid.
10. DELAY IN ENFORCING RIGHTS AND CHANGES IN THE LOAN — We can
delay enforcing any of our rights under this Agreement any number of times
without losing the ability to exercise our rights later. We can enforce this
Agreement against your heirs or legal representatives. If we change the terms of
the Loan, you agree that this Agreement will remain in effect.
11. CONTINUED EFFECTIVENESS — If any part of this Agreement is determined
by a court to be unenforceable, the rest will remain in effect.
12. NOTICE TO NORTH DAKOTA BORROWERS PURCHASING A MOTOR
VEHICLE — THE MOTOR VEHICLE IN THIS TRANSACTION MAY BE SUBJECT
TO REPOSSESSION. IF IT IS REPOSSESSED AND SOLD TO SOMEONE ELSE,
AND ALL AMOUNTS DUE TO THE SECURED PARTY ARE NOT RECEIVED IN
THAT SALE, YOU MAY HAVE TO PAY THE DIFFERENCE.
13. NOTICE FOR ARIZONA OWNERS OF PROPERTY — It is unlawful for you
to fail to return a motor vehicle that is subject to a security interest, within
thirty days after you have received notice of default. The notice will be mailed
to the address you gave us. It is your responsibility to notify us if your address
changes. The maximum penalty for unlawful failure to return a motor vehicle is
one year in prison and/or a fine of $150,000.00.
14. CONSUMERS’ CLAIMS AND DEFENSES NOTICE — The following
paragraph applies only when the box on the reverse side is checked.
51
52
53
54
55
56
57
58
NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT
IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR
COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES
OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF.
RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR HEREUNDER.
Closed-End Consumer Lending User Guide
16
Page 2 instructions
33.Payments – This is the borrower’s promise to make payments as specified in the Truth in
Lending Disclosure. This paragraph also discloses to the borrower that there is no prepayment
penalty and if payments are not made as scheduled, the final payment may be more or less
than the final payment that was disclosed. Also, if voluntary payment protection is elected, the
premium or program fees may be included in the payment or the loan term will be extended. If
you are using a fixed/variable note, this section would also contain information on the variable
rate.
34.Loan Proceeds By Mail – This is an explanation that interest begins on the date the loan
proceeds are mailed, if this loan is transacted through the mail.
35. Security For Loan – Regulation Z, Section 1026.18(m) requires that the creditor disclose the
fact that it will acquire a security interest in the property purchased or in other property identified
by item or type. The LOANLINER Loan Agreement discloses that the loan is secured by all items
described in the “Security” section of the Truth in Lending Disclosure.
The loan also is secured by property securing other loans with the credit union, unless the
property is a dwelling.
Much of this section deals with a statutory lien. A statutory lien is applicable to federal and
many state-chartered credit unions. In 1999, NCUA issued regulations that required federal
credit unions to disclose statutory liens in a certain manner. If a borrower’s loan is in default,
the statutory lien allows your credit union to apply the balance of shares and dividends in all
individual and joint accounts with your credit union to satisfy the obligation.
There is also a general pledge of shares in this section, which allows your credit union to apply
the funds in your borrowers’ account(s) to what they owe when they are in default. This pledge is
considered additional security for all loans. The pledge does not apply to Individual Retirement
Accounts (IRA) or any other account that would lose special tax treatment under state or federal
law if given as security. As long as your borrower is making payments and the loan is not share
secured, your borrower has access to his/her shares and/or deposits.
ote: For state-chartered credit unions located in states where statutory liens are not allowed,
N
the general pledge of shares would apply.
36.Default – This paragraph describes the elements of default and allows your credit union to
accelerate the unpaid balance in the event of default. The default language will vary by version,
due to state law requirements. Be sure to read this paragraph before deciding whether you can
call a loan in default. If you have questions, consult your legal counsel.
37.Actions After Default – This section includes a statement allowing the credit union to accelerate
the unpaid balance in the event of default. If this paragraph gives the borrower a right to cure
the default, be sure you comply with the applicable state law on timing and content of the Right
to Cure Notice. When a debt is accelerated, interest will continue on the unpaid balance at
the same rate. Lastly, your credit union may exercise any other rights given by law when your
borrower is in default.
38.Each Person Responsible – This paragraph explains that each person who signs, or otherwise
authenticates the Loan Agreement will be held individually and jointly responsible for paying the
entire amount owed under the Agreement.
Closed-End Consumer Lending User Guide
17
Page 2 instructions (continued)
39. Late Charge – This paragraph explains that if your borrower is late in making a payment, they
promise to pay the late charge shown in the Truth in Lending Disclosure, if one is disclosed.
40. Delay in Enforcing Rights – This statement provides that your credit union can delay enforcing
any rights under this Agreement without losing the ability to exercise those rights later.
41. Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, the remainder of the Agreement remains in effect.
42.Notices – This paragraph states that your credit union will send notices to the most recent
address your borrower gave your credit union in writing and that notice to one is notice to all.
43. Use of Account – This paragraph was added to the Loan Agreement due to the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) which gave the credit union
protection against court-ordered reduction (cramdown) of a secured balance due on purchasemoney secured debt acquired for personal, family or household purposes. This provision will
prove a vehicle was purchased for personal use.
44. No Oral Agreements – This paragraph applies to Texas transactions and confirms that the
rights and obligations of the borrower and lender shall be determined solely from the written
Loan Agreements and any prior oral agreements between the lender and borrower are
superseded by the Loan Agreement.
Security Agreement Section
45. The Security For the Loan – This paragraph grants your credit union a security interest in
the property described in the “Security” section of the Truth in Lending Disclosure. It is very
important that you thoroughly describe the collateral in the Truth in Lending Disclosure. It also
permits your credit union a security interest in accessions, proceeds of the collateral, and allows
you to obtain additional collateral if the market value of the collateral declines.
46.What the Security Interest Covers – This paragraph states that the property described in the
Truth in Lending Disclosure secures the loan. The security for the loan will also be security for
other debts with the credit union, now and in the future, unless the property is a dwelling. This is
known as a “cross-collateral” clause. However, if the property is household goods as defined by
Federal Trade Commission Credit Practices Rule, the property can only secure this loan and not
other loans or amounts owed to the credit union.
47. Ownership of the Property – This paragraph describes the borrower’s ownership rights. This
clause explains that a borrower can be considered in default if they sign the Security Agreement
and they do not own the collateral shown in the “Security” section of the Truth in Lending
Disclosure. It outlines that the borrower cannot sell the collateral or give anyone else a security
interest in it until the debt has been paid, nor can they allow any other security interest or lien to
be attached to the property.
48. Protecting the Security Interest – This paragraph requires the borrower to promise to assist
the credit union in any way to protect the security interest. It also requires the borrower to
identify your credit union as lien holder on the title and requires the borrower to sign a financing
statement, if necessary.
Closed-End Consumer Lending User Guide
18
Page 2 instructions (continued)
49. Use of Property – This paragraph outlines the responsibilities of the borrower to maintain the
collateral.
50.Property Insurance, Taxes and Fees – This paragraph contains information about taxes, fees
and property insurance on the collateral. The borrower is required to pay all taxes and fees
plus insure the property and name the credit union as loss payee on an insurance policy. Any
amounts spent by your credit union on taxes, fees or property insurance can be added to the
loan balance and be subject to interest at the same rate as the original loan. Your credit union
has the option of increasing the borrower’s payment to the extent necessary to repay the loan in
the original scheduled term or extend the term of the loan to repay these amounts.
51. Insurance Notice – This paragraph states that if your borrower does not purchase property
insurance, your credit union can purchase and charge your borrower for insurance that covers
only your credit union’s interest in the property.
52.Default – Article 9 of the Uniform Commercial Code (UCC) does not define default, so the
contract must define this term. Default is defined as breaking any promise or failing to perform
any obligation under this Security Agreement or the LOANLINER Loan and Security Agreements
and Disclosure Statement.
53.What Happens if you are in Default – This paragraph describes your credit union’s rights if the
property is in default. It gives your credit union the right to accelerate the debt and repossess the
collateral upon default. It establishes the right to sell the repossessed property and to pass any
costs involved onto your borrowers. Lastly, it requires your borrower to pay any remaining loan
balance after the sale money has been applied. If you are required to give the borrower a right to
cure the default, be sure to follow state law requirements on the timing and content of the notice.
54. Delay in Enforcing Rights and Changes in the Loan – This statement provides that your
credit union can delay enforcing any rights under this Agreement without losing the ability to
exercise those rights later.
55.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, the remainder of the Agreement is still in effect.
56.Notice to North Dakota Borrowers Purchasing a Motor Vehicle – This paragraph states that
a motor vehicle may be subject to repossession for North Dakota borrowers. This notice will only
appear on the document used for North Dakota borrowers.
57.Notice for Arizona Owners of Property – This paragraph describes responsibilities for Arizona
owners of property when in default on a motor vehicle. This notice will only appear on the
document used for Arizona borrowers.
Closed-End Consumer Lending User Guide
19
Page 2 instructions (continued)
58.Consumers’ Claims and Defenses Notice – This is a notice required by the Federal Trade
Commission. It is often referred to as the “Holder in Due Course” rule. This notice must be
given when the credit union is selling a repossessed car. It is also given in those situations in
which there is a “business arrangement” between the seller and your credit union. “Business
arrangement” is defined as “any understanding, procedure, course of dealing or arrangement,
formal or informal, between a creditor and a seller, in connection with the sale of goods or
services to consumers or the financing thereof.”
This rule applies to both affiliations and referrals. Examples of an affiliation would include:
maintenance of loan application documents in the office of the seller, agreement by the seller
with the creditor to prepare loan documents, the creditor’s referrals of customers to a sales
outlet, payment of consideration to a seller for furnishing the loan customers or to a creditor for
furnishing sales prospects, the assignment of indirect paper or the referral of loan customers
to a creditor, active creditor participation in the sales program, joint advertising efforts, or an
agreement to purchase paper on an indirect basis. Referral is viewed as a pattern of cooperative
activity directly relating to the arranging of credit. The seller and the creditor must be engaged in
cooperative or concerted conduct to send a consumer to the creditor.
The box on the front of the Loan Agreement should be checked if the dealer advised you, by
agreement or otherwise, that this notice is applicable. The box should also be checked if you are
selling a repossessed vehicle.
Closed-End Consumer Lending User Guide
20
Chapter 3:
Consumer Loan and Security Agreements and
Disclosure Statement
Document Description – Electronic format
When Used:
This document is used when a borrower has been approved for a
closed-end loan. It is used to document the transaction. The documents
are available for fixed rate loans only or for fixed/variable rate loans.
Purpose:
The Loan and Security Agreements and Disclosure Statement provide:
1. disclosures required by Regulation Z
2.contract terms between the credit union and the borrower(s)
All Truth in Lending disclosures are given in the “Fed Box” area. The
Loan Agreement and Security Agreement are separate agreements.
Document
Number:
NXX01*
How distributed:
A copy of this document must be given to a borrower (if joint borrowers,
only one needs to receive a copy)
State-specific
versions:
Florida, Iowa, Louisiana, New Hampshire, Right to Cure, Virginia and
Wisconsin
*Indicates spaceholder for version number
Closed-End Consumer Lending User Guide
21
Page 1 sample
1
Loan and Security Agreements
and Disclosure Statement
FIXED RATE
VARIABLE RATE
2
3
LOAN DATE
4
LOAN NUMBER
5
BORROWER 1
NAME AND ADDRESS
ACCOUNT NUMBER
6
GROUP POLICY NUMBER
MATURITY DATE
7
BORROWER 2
NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)
8
8
TRUTH IN LENDING DISCLOSURE 'e' means an estimate
ANNUAL PERCENTAGE RATE
FINANCE CHARGE
Amount Financed
Total of Payments
Total Sale Price
The cost of your credit as a yearly rate.
The dollar amount the
credit will cost you.
The amount of credit
provided to you or on
your behalf.
The amount you will have
paid after you have made
all payments as scheduled.
The total cost of your purchase on credit is
9
$
%
10
Your Payment Schedule Will Be:
Number of Payments Amount of Payments
14
$
11
$
When Payments Are Due
12
$
which includes your
downpayment of $
13
.
Prepayment: If you pay off early you will not have to
pay a penalty. 17
$
Required Deposit: The Annual Percentage Rate does
not take into account your required deposit, if any. 18
$
Demand:
Property Insurance: You may obtain property insurance from anyone you
want that is acceptable to the Credit Union. If you get the insurance from us,
you will pay $ 15
19
Filing Fees
20
$
This obligation has a demand feature.
All disclosures are based on an assumed
maturity of one year.
Non-Filing Insurance
$
21
Late Charge:
16
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your
shares and dividends and, if any, your deposits and interest in the Credit Union; and the property described below:
Year I.D. Number
Collateral
Property/Model/Make
Key Number
Value
Type
$
$
$
22
Other (Describe)
Pledge of Shares $
Variable Rate:
$
in Account No.
in Account No.
23
See your contract documents for any additional information about nonpayment, default, and any required repayment in full before the
scheduled date.
24
SIGNATURES
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is
described in the "Security" section of the Truth in Lending Disclosure, you also agree to the terms of the Security
Agreement. If you sign, or otherwise authenticate, as "Owner of Property" you agree only to the terms of the Security
Agreement.
CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X
BORROWER 1
26
25
(SEAL)
DATE
X
OWNER OF PROPERTY
WITNESS
(SEAL)
DATE
X
(SEAL)
OTHER BORROWER
X
BORROWER 2
DATE
(SEAL)
OTHER BORROWER
CUNA Mutual Group 1999, 2000, 01, 02, 03, 04, 06, 08 All Rights Reserved
Closed-End Consumer Lending User Guide
OWNER OF PROPERTY
WITNESS
DATE
NXX01A-e
22
Page 1 instructions
Please refer to the document on the preceding pages for the corresponding numbers.
1.Credit Union Information – This space is used to identify the credit union as required by
Regulation Z, Section 1026.18(a). Have your data processor set up your credit union’s name,
address, telephone number and logo to print.
2. Fixed/Variable Rate – Enter an “X” in the “Fixed Rate” box, if loan is a fixed rate loan. Enter
an “X” in the “Variable Rate” box if loan is a variable rate loan. If the credit union doesn’t offer
variable rate loans, notes for fixed rate only are available.
3. Loan Date – Date of current loan.
4.Loan Number – Loan identification number as defined by the credit union.
5. Account Number – Member account number.
6.Group Policy Number – Enter the credit union’s contract number as defined by CUNA Mutual
Group.
7.Maturity Date – Enter maturity date of loan.
8. Borrower 1 Name and Address/Borrower 2 Name and Address – Name and address of each
borrower.
Truth in Lending Disclosure Section
The Truth in Lending Act requires certain disclosures be segregated from other information on a
closed-end lending document per Regulation Z, Section 1026.17(a). The area labeled “Truth in
Lending Disclosure” is referred to as the “Fed Box.” The Truth in Lending Disclosure contains the
following items:
9.Annual Percentage Rate – Your credit union completes the APR for the loan requested,
Regulation Z, Sections 1026.18(e) and 1026.22.
Note:The APR will be the simple interest rate when the only finance charge is interest. If finance
charges other than interest are to be included, the APR will be different than the simple interest
rate and must be calculated using a calculation device sufficiently sophisticated to correctly
compute the correct APR. Examples of finance charges on consumer loans include:
a) credit report fees
b) loan processing fees
c) mandatory residual value insurance (RVI)
d) mandatory GAP coverage
10.Finance Charge – Your credit union completes the total finance charge for the loan as required
by Regulation Z, Section 1026.18(d).
Note: Any prepaid finance charge should be included in this amount. Do not put an ‘e’ for
estimate in this box. The Disclosure should be completed with the total finance charge known at
the time of disclosure.
Closed-End Consumer Lending User Guide
23
Page 1 instructions (continued)
11.Amount Financed – Regulation Z, Section 1026.18(b) requires that the amount financed be
calculated in the following way:
a) Start with the principal loan amount.
b)Add other amounts that are financed by the lender and are not part of the finance charge.
Level rate and monthly renewable credit insurance is not financed; therefore, the cost for
this insurance should not be included in the “Amount Financed” section. Single premium
insurance is financed and will be included in this amount.
c) Subtract any prepaid finance charge.
12.Total of Payments – The sum of the payments for the loan, Regulation Z, Section 1026.18(h).
The total of payments should equal the sum of the payments reflected in the payment schedule.
For example: If the payment schedule has 36 payments of $100.00, the total of payments would
show $3,600.00. The total of payments can include amounts that are not included in the finance
charge or amount financed, such as credit life and credit disability insurance. It is not necessary
to put an ‘e’ for estimate in this box. The Loan and Security Agreements and Disclosure
Statement should be completed with the total payments known at the time the disclosure is
prepared.
13.Total Sales Price – Regulation Z, Section 1026.18(j) requires this disclosure be used whenever
your credit union is both the seller and the creditor. This is most likely to happen when you are
selling a repossessed vehicle. In this section you must disclose both the total sale price and the
downpayment amount, if any.
The total sale price is the sum of the:
a) cash price
b) amounts that are financed but not finance charges
c) finance charge
14.Payment Schedule – Enter number, amount(s), and due date(s) of payments, Regulation Z,
Section 1026.18(g). If voluntary payment protection is elected, the premium is included in the
payment amount.
15.Property Insurance – If your credit union sells property insurance, enter the amount of the
insurance premium. The term of the insurance must also be disclosed if it is less than the term of
the loan, Regulation Z, Section 1026.18(n).
16.Late Charge – The late charge is any dollar or percentage charge that may be imposed before
maturity due to a late payment. This language is provided by the credit union and may be printed
on the documents, Regulation Z, Section 1026.18(l).
17.Prepayment – Regulation Z, Section 1026.18(k) requires disclosure of any prepayment penalty.
The language in the LOANLINER documents prohibits a prepayment penalty.
Closed-End Consumer Lending User Guide
24
Page 1 instructions (continued)
18. Required Deposit – Per Regulation Z, Section 1026.18(r) and footnote 45, this language is
required when the borrower must maintain a deposit as a condition of the loan.
19.Demand Feature – Enter an “X” in the first box if this loan has a demand feature. A demand
feature enables the credit union to call a loan payable in full at any time or within a stated
period of time, even if the borrower is making payments and is not in default. If the loan is a
demand loan, you must add additional language to the loan agreement in the “Other Provisions”
paragraph.
20. Filing Fees – If you pass on the cost of filing fees (for example, a lien filing fee) to borrowers,
whether directly or indirectly, you must disclose the cost — even if the borrower pays the fee in
cash to the credit union or a third party. This fee is not a finance charge if you only pass on the
actual cost charged by government officials, Regulation Z, Section 1026.18(o).
21.Non-Filing Insurance – Enter the dollar amount of the non-filing insurance. This insurance
premium is used to perfect the lien in lieu of actually filing the security interest, Regulation Z,
Section 1026.18(o).
22.Security – The statement “Collateral securing other loans with the credit union may also
secure this loan” is printed to disclose the existence of a cross-collateral clause in the Security
Agreement. The statement “You are giving a security interest in your shares and dividends and,
if any, your deposits and interest in the credit union; and the property described below:” discloses
that shares/deposits are also offered to secure the loan. The description of the collateral must
be included here since this portion of the Truth in Lending Disclosure also is part of the Security
Agreement. A complete description of collateral should be shown. Also, additional security
offered should be disclosed in the “other” field. For Pledge of Shares, enter the amount and
account number for share secured loans.
23. Variable Rate – The definition of a variable rate loan for closed-end credit is any loan that
can increase after consummation in a transaction not secured by the consumer’s principal
dwelling. The Loan and Security Agreement was designed to handle all types of credit secured
by personal property. There are many types of variable rate closed-end transactions and they
generally fall into one of the following categories:
a)Changes that follow an external index such as the Prime Rate, Treasury Bill Rates, Eleventh
District Cost of Funds, Treasury Securities, etc. These are indexes that are set up by some
agency or group other than the credit union and are generally published in The Wall Street
Journal, the financial pages of many local newspapers and the Federal Reserve Statistical
Release and Federal Reserve Board Bulletin.
b)Changes that follow an external index that are beyond the control of the credit union such
as the rate charged by another local financial institution; e.g., the fixed rate charged by XYZ
Financial for 30-year fixed rate mortgages. These rates generally are not officially published
like the indices described in (a.) above, but they are beyond the control of the credit union.
c)Changes that follow an internal index of the credit union. An example would be the credit
union’s rate on 6-month certificates or the dividend rate paid on share accounts.
d)Changes in the rate that are based entirely on the discretion of the credit union’s board of
directors. At any particular time the board of directors can decide that the interest rate will
change on existing loans.
Closed-End Consumer Lending User Guide
25
Page 1 instructions (continued)
e)Changes that are tied to some event or occurrence. Common occurrences in credit union
loans which trigger an interest rate increase include: (a) when an employee leaves the
employment of the credit union, (b) discontinuing payroll deduction or automatic payment, (c)
failure to maintain minimum account balances or (d) failure to maintain certain services.
f)A renewable balloon payment when (1) the credit union is unconditionally obligated to
renew the balloon payment loan at the consumer’s option or subject to conditions within the
consumer’s control and (2) the credit union has the option of increasing the interest rate at
the time of renewal of the balloon.
REQUIRED DISCLOSURES FOR VARIABLE RATE LOANS
The following disclosures must appear in this section of the document:
• The Circumstances Under Which the Rate May Increase
SAMPLE LANGUAGE:
The APR may increase during the term of this transaction if:
[the prime interest rate of (creditor) increases.]
[the balance in your deposit account falls below $__________.]
[you terminate your employment with (employer).]
• Any Limitation on the Increase
SAMPLE LANGUAGE:
[The interest rate will not increase above ______%.]
[The maximum interest rate increase at one time will be _____%.]
[The rate will not increase more than once every (time period).]
• The Effect of an Increase
SAMPLE LANGUAGE:
Any increase will take the form of:
[higher payment amounts.]
[more payments of the same amount.]
[a larger amount due at maturity.]
•An Example of the Payment Terms that would Result from an Increase
The example must be either a standard example that illustrates the terms and conditions of
the type of credit offered by the credit union or it may directly reflect the terms and conditions
of the particular transaction.
In addition to the Truth in Lending Disclosures, you must also explain any other terms of
the variable rate which are directly related. These include: the margin, interest rate floors,
rounding of index values or payments.
Closed-End Consumer Lending User Guide
26
Page 1 instructions (continued)
24.Contract Reference – This is a statement per Regulation Z, Section 1026.18(p) that the
consumer should refer to the appropriate contract documents for information about nonpayment,
default and prepayment penalties, and rebates.
Signatures Section
25. Signature Section – This area contains signature language that will vary on some documents
due to state law variations.
26.Borrower’s Signature – The borrower signs, or otherwise authenticates the Loan and Security
Agreements and Disclosure Statement in this area. Additional signatures may be obtained using
these areas. By signing, or otherwise authenticating as a borrower, a person is agreeing to the
Loan and Security Agreements. If the owner of the property is not a borrower, the box “Owner of
Property” should be checked. (This is the ONLY situation when this box should be checked.) The
owner of property is agreeing only to the terms of the Security Agreement. A witness may also
sign here. A witness signature is not required under the Truth in Lending Act.
Closed-End Consumer Lending User Guide
27
Page 2 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
ITEMIZATION OF THE AMOUNT FINANCED
27
Itemization of Amount Financed of 28 Amount Given to You Directly 29 Amount Paid on Your Account
$
$
$
30
Prepaid Finance Charge
$
Amounts Paid to Others on Your Behalf: (If an amount is marked with an asterisk (*) we will be retaining a portion of the amount.)
31
$
$
$
$
$
$
$
$
$
$
$
$
$
$
To
To
To
To
To
To
To
To
To
To
To
To
To
To
LOAN AGREEMENT
In this Loan Agreement ("Agreement") all references to "Credit Union," "we," "our," or "us," mean the Credit Union whose name
appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you" or "your" mean each
person who signs, or otherwise authenticates, this Agreement as a borrower.
1. PROMISE TO PAY - You promise to pay $
to the Credit Union plus interest on the unpaid balance until what you owe
32 has been repaid. For fixed rate loans the interest rate is
% per year.
For variable rate loans the initial interest rate is
% per year and will vary as follows:
33 Collection Costs:
2. PAYMENTS - You promise to make payments of the
amount and at the time shown in the Truth in Lending
Disclosure. If this is a variable rate loan, the Promise to Pay
section tells you whether, if the interest rate increases, you
will have to make more payments, higher payments, or if
the final payment will be a balloon payment. You may
prepay any amount without penalty. If you prepay any part
of what you owe, you are still required to make the
regularly scheduled payments, unless we have agreed to a
change in the payment schedule. Because this is a simple
interest loan, if you do not make payments exactly as
scheduled, your final payment may be more or less than the
amount of the final payment that is disclosed. If you elect
voluntary payment protection, we will either include the
premium or program fee in your payments or extend the
term of your loan. If the term is extended, you will be
required to make additional payments of the scheduled
amount, until what you owe has been paid. You promise to
make all payments to the place we choose. If this loan
refinances another loan we have with you, the other loan
will be canceled and refinanced as of the date of this loan.
Unless otherwise required by law, payments will be applied
to amounts owed in the manner we choose.
35 3. LOAN PROCEEDS BY MAIL - If the proceeds of this loan
are mailed to you, interest on this loan begins on the date
the loan proceeds are mailed to you.
36 4. SECURITY FOR LOAN - This Agreement is secured by all
property described in the "Security" section of the Truth in
Lending Disclosure. Property securing other loans you have
with us also secures this loan, unless the property is a
dwelling. In addition to your pledge of shares, we may also
have what is known as a statutory lien on all individual and
joint accounts you have with us. A statutory lien means we
have the right under federal law and many state laws to
claim an interest in your accounts. We can enforce a
statutory lien against your shares and dividends, and if any,
interest and deposits, in all individual and joint accounts you
34
have with us to satisfy any outstanding financial obligation
that is due and payable to us. We may exercise our right to
enforce this lien without further notice to you, to the extent
permitted by law. For all borrowers: You pledge as security
for this loan all shares and dividends and, if any, all deposits
and interest in all joint and individual accounts you have
with the Credit Union now and in the future. The statutory
lien and/or your pledge will allow us to apply the funds in
your account(s) to what you owe when you are in default.
The statutory lien and your pledge do not apply to any
Individual Retirement Account or any other account that
would lose special tax treatment under state or federal law
if given as security.
5. DEFAULT - You will be in default under this Agreement if
you do not make a payment of the amount required on or
before the date it is due. You will be in default if you break
any promise you made in connection with this loan or if
anyone is in default under any security agreement made in
connection with this Agreement. You will be in default if
you die, file for bankruptcy, become insolvent (that is, 37
unable to pay your bills and loans as they become due), or
if you made any false or misleading statements in your loan
application. You will also be in default if something happens
that we believe may seriously affect your ability to repay
what you owe under this Agreement or if you are in default
under any other loan agreement you have with us.
6. ACTIONS AFTER DEFAULT - When you are in default,
we may demand immediate payment of the entire unpaid
balance under this Agreement. You waive any right you
have to receive demand for payment, notice of intent to
demand immediate payment and notice of demand for 38
immediate payment. If we demand immediate payment, you
will continue to pay interest at the rate provided for in this
Agreement, until what you owe has been repaid. We will
also apply against what you owe any shares and/or deposits
given as security under this Agreement. We may also
exercise any other rights given by law when you are in
default.
NXX01A-e
Closed-End Consumer Lending User Guide
28
Page 2 instructions
Itemization of Amount Financed Section
27. Itemization of Amount Financed – Enter amount the borrower financed per Regulation Z,
Section 1026.18(c). This is the amount shown in the “Amount Financed” box.
28.Amount Given to You Directly – Enter the amount of money given to the borrower in the form
of cash or a check, as well as funds placed in an asset account. (Asset accounts include, but are
not limited to, share accounts, share draft accounts, etc.)
Note: If a check is made out to the borrower and another party, this amount is to be included in
this box. You don’t have to show the other party in the section “Amounts Paid to Others on your
Behalf,” Regulation Z, Official Staff Interpretation, paragraph 18(c)(1)(i) - 1. Amounts paid to
Consumer.
29.Amount Paid on Your Account – This is the amount your credit union will use to pay off
an existing loan balance. This section would include a payment of an existing loan balance
(principal and accrued interest) on a prior loan. Only amounts paid to loan accounts should be
shown here, Regulation Z, Section 1026.18(c)(1)(ii).
30.Prepaid Finance Charge – Prepaid finance charges include any portion of the finance charge
paid prior to or at closing or settlement. They may be paid in cash or financed and withheld
from the proceeds. Some common examples include: service fees, loan fees, loan guarantee
insurance, credit report fees, residual value insurance and mandatory GAP coverage. Prepaid
finance charges are subtracted from the amount financed and added to the finance charge for
disclosure purposes. This will result in an APR that is different than the contractual interest rate.
31. Amount Paid to Others on Your Behalf – These boxes are provided to disclose amounts
paid to other persons by the credit union on the borrower’s behalf. These persons must be
identified by name except that payments to government agencies, public officials, credit report
agencies, appraisers and insurance companies may be generically identified with phrases like
“credit bureau” or “state agency.” If loan checks are made payable to a third party only, and not
the borrower, the amount of the payment and the name of the third party must be disclosed,
Regulation Z, Section 1026.18(c)(1)(iii).
Note: The level rate or monthly renewable credit disability/credit life costs or amounts need not
be disclosed in this section.
This section includes a sentence which reads as follows: If an amount is marked with an
asterisk(*), we will be retaining a portion of the amount. An asterisk should be used whenever
the borrower is financing a product for which the credit union imposes an “upcharge.” Typically,
if the credit union sells mechanical repair coverage (MRC) or extended warranties and retains
a portion of the amount, then an asterisk will be needed. An example would be if the borrower
purchased an extended warranty from the credit union. The warranty may cost the credit union
$300.00, but the credit union charges the borrower $400.00. The $100.00 difference is an
“upcharge” on this product. The credit union needs to disclose that it is retaining a portion of the
$400.00 that is being charged to the borrower.
Closed-End Consumer Lending User Guide
29
Page 2 instructions (continued)
Loan Agreement Section
32.Promise to Pay – This is the contractual promise to repay the principal loan amount plus
interest. Your credit union should put the note interest rate here as well as the principal amount
borrowed. If this is a variable rate loan, the initial interest rate is entered here. The contractual
interest rate used to amortize the loan may be different than the APR if there are prepaid finance
charges as part of the loan. If this is a variable rate loan you must also include the variable rate
contract language. The sample shows the fixed/variable promise to pay language. The fixed
rate language is as follows: You promise to pay $______ to the credit union plus interest on
the unpaid balance until what you owe has been repaid. For fixed rate loans the interest rate is
______% per year.
33.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are to be disclosed. This language may be imprinted.
34.Payments – This is the borrower’s promise to make payments as specified in the Truth in Lending
Disclosure. This paragraph also discloses to the borrower that there is no prepayment penalty
and if payments are not made as scheduled, the final payment may be more or less than the
final payment that was disclosed. Also, if voluntary payment protection is elected, the premium or
program fees may be included in the payment or the loan term will be extended. If you are using a
fixed/variable note, this section would also contain information on the variable rate.
35.Loan Proceeds By Mail – This is an explanation that interest begins on the date the loan
proceeds are mailed, if this loan is transacted through the mail.
36.Security For Loan – Regulation Z, Section 1026.18(m) requires that the creditor disclose the
fact that it will acquire a security interest in the property purchased or in other property identified
by item or type. The LOANLINER Loan Agreement discloses that the loan is secured by all items
described in the “Security” section of the Truth in Lending Disclosure.
The loan also is secured by property securing other loans with the credit union, unless the
property is a dwelling.
Much of this section deals with a statutory lien. A statutory lien is applicable to federal and
many state-chartered credit unions. In 1999, NCUA issued regulations that required federal
credit unions to disclose statutory liens in a certain manner. If a borrower’s loan is in default,
the statutory lien allows your credit union to apply the balance of shares and dividends in all
individual and joint accounts with your credit union to satisfy the obligation.
There is also a general pledge of shares in this section, which allows your credit union to apply
the funds in your borrower’s account(s) to what they owe when they are in default. This pledge
is considered additional security for all loans. The pledge does not apply to IRAs or any other
account that would lose special tax treatment under state or federal law if given as security. As
long as your borrower is making payments and the loan is not share secured, your borrower has
access to his/her shares and/or deposits.
ote: For state-chartered credit unions located in states where statutory liens are not allowed,
N
the general pledge of shares would apply.
Closed-End Consumer Lending User Guide
30
Page 2 instructions (continued)
37.Default – This paragraph describes the elements of default and allows your credit union to
accelerate the unpaid balance in the event of default. The default language will vary by version
due to state law requirements. Be sure to read this paragraph before deciding whether you can
call a loan in default. If you have questions, consult your legal counsel.
38.Actions After Default – This section includes a statement allowing the credit union to accelerate
the unpaid balance in the event of default. If this paragraph gives the borrower a right to cure
the default, be sure you comply with the applicable state law on timing and content of the Right
to Cure Notice. When a debt is accelerated, interest will continue on the unpaid balance at
the same rate. Lastly, your credit union may exercise any other rights given by law when your
borrower is in default.
Closed-End Consumer Lending User Guide
31
Page 3 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
LOAN AGREEMENT (continued)
39
40
41
42
7. EACH PERSON RESPONSIBLE - Each person who signs,
or otherwise authenticates, this Agreement will be
individually and jointly responsible for paying the entire
amount owed under this Agreement. This means we can
enforce our rights against any one of you individually or
against all of you together.
8. LATE CHARGE - If you are late in making a payment,
you promise to pay the late charge shown in the Truth in
Lending Disclosure. If no late charge is shown, you will not
be charged one.
9. DELAY IN ENFORCING RIGHTS - We can delay enforcing
any of our rights under this Agreement any number of times
without losing the ability to exercise our rights later. We
can enforce this Agreement against your heirs or legal
representatives.
10. CONTINUED EFFECTIVENESS - If any part of this
Agreement is determined by a court to be unenforceable,
the rest will remain in effect.
11. NOTICES - Notices will be sent to you at the most recent
address you have given us in writing. Notice to any one of
you will be notice to all.
12. USE OF ACCOUNT - You promise to use your account
for consumer (personal, family or household) purposes,
unless the Credit Union gives you written permission to use
the account also for agricultural or commercial purposes, or
to purchase real estate.
13. NO ORAL AGREEMENTS -- THIS NOTE CONSTITUTES
A "WRITTEN LOAN AGREEMENT" PURSUANT TO
SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, IF SUCH SECTION APPLIES. THIS
WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
14. OTHER PROVISIONS -
43
44
45
46
NXX01A-e
Closed-End Consumer Lending User Guide
32
Page 3 instructions
39.Each Person Responsible – This paragraph explains that each person who signs, or otherwise
authenticates the Loan Agreement will be held individually and jointly responsible for paying the
entire amount owed under the Agreement.
40. Late Charge – This paragraph explains that if your borrower is late in making a payment, they
promise to pay the late charge shown in the Truth in Lending Disclosure, if one is disclosed.
41.Delay in Enforcing Rights – This statement provides that your credit union can delay enforcing
any rights under this Agreement without losing the ability to exercise those rights later.
42.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, that the remainder of the Agreement remains in effect.
43.Notices – This paragraph states that your credit union will send notices to the most recent
address your borrower gave your credit union in writing and that notice to one is notice to all.
44.Use of Account – This paragraph was added to the Loan Agreement due to the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) which gave the credit union
protection against court-ordered reduction (cramdown) of a secured balance due on purchasemoney secured debt acquired for personal, family or household purposes. This provision will
prove a vehicle was purchased for personal use.
45. No Oral Agreements – This paragraph applies to Texas transactions and confirms that the
rights and obligations of the borrower and lender shall be determined solely from the written
Loan Agreements and any prior oral agreements between the lender and borrower are
superseded by the Loan Agreement.
46.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Closed-End Consumer Lending User Guide
33
Page 4 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
SECURITY AGREEMENT
47
48
49
50
51
52
In this Agreement all references to "Credit Union," "we," "our" or
"us" mean the Credit Union whose name appears on this document
and anyone to whom the Credit Union assigns or transfers this
Agreement. All references to the "Loan" mean the loan described in
the Loan Agreement that is part of this document. All references to
"you" or "your" mean any person who signs, or otherwise
authenticates, this Agreement.
1. THE SECURITY FOR THE LOAN - You give us what is known as a
security interest in the property described in the "Security" section
of the Truth in Lending Disclosure that is part of this document ("the
Property"). The security interest you give includes all accessions.
Accessions are things which are attached to or installed in the
Property now or in the future. The security interest also includes any
replacements for the Property which you buy within 10 days of the
Loan and any extensions, renewals or refinancings of the Loan. It
also includes any money you receive from selling the Property or
from insurance you have on the Property. If the value of the
Property declines, you promise to give us more property as security
if asked to do so.
2. WHAT THE SECURITY INTEREST COVERS/CROSS COLLATERAL
PROVISIONS - The security interest secures the Loan and any
extensions, renewals or refinancings of the Loan. The security
interest also secures any other loans, including any credit card loan,
you have now or receive in the future from us and any other
amounts you owe us for any reason now or in the future, except
any loan secured by your principal dwelling. If the Property is
household goods as defined by the Federal Trade Commission Credit
Practices Rule or your principal dwelling, the Property will secure
only this Loan and not other loans or amounts you owe us.
3. OWNERSHIP OF THE PROPERTY - You promise that you own the
Property or, if this Loan is to buy the Property, you promise you will
use the Loan proceeds for that purpose. You promise that no one
else has any interest in or claim against the Property that you have
not already told us about. You promise not to sell or lease the
Property or to use it as security for a loan with another creditor until
the Loan is repaid. You promise you will allow no other security
interest or lien to attach to the Property either by your actions or by
operation of law.
4. PROTECTING THE SECURITY INTEREST - If your state issues a
title for the Property, you promise to have our security interest
shown on the title. We may have to file what is called a financing
statement to protect our security interest from the claims of others.
You irrevocably authorize us to execute (on your behalf), if
applicable, and file one or more financing, continuation or
amendment statements pursuant to the Uniform Commercial Code
(UCC) in a form satisfactory to us. You promise to do whatever
else we think is necessary to protect our security interest in the
Property. You also promise to pay all costs, including but not limited
to any attorney fees, we incur in protecting our security interest and
rights in the Property, to the extent permitted by applicable law.
5. USE OF PROPERTY - Until the Loan has been paid off, you
promise you will: (1) Use the Property carefully and keep it in good
repair. (2) Obtain our written permission before making major
changes to the Property or changing the address where the Property
is kept. (3) Inform us in writing before changing your address. (4)
Allow us to inspect the Property. (5) Promptly notify us if the
Property is damaged, stolen or abused. (6) Not use the Property for
any unlawful purpose. (7) Not retitle Property in another state
without telling us.
6. PROPERTY INSURANCE, TAXES AND FEES - You promise to pay
all taxes and fees (like registration fees) due on the Property and to
keep the Property insured against loss and damage. The amount and
coverage of the property insurance must be acceptable to us. You
may provide the property insurance through a policy you already
have, or through a policy you get and pay for. You promise to make
the insurance policy payable to us and to deliver the policy or proof
of coverage to us if asked to do so.
If you cancel your insurance and get a refund, we have a right to the
refund. If the Property is lost or damaged, we can use the insurance
settlement to repair the Property or apply it towards what you owe.
You authorize us to endorse any draft or check which may be
payable to you in order for us to collect any refund or benefits due
under your insurance policy.
If you do not pay the taxes or fees on the Property when due or
keep it insured, we may pay these obligations, but we are not
required to do so. Any money we spend for taxes, fees or insurance
will be added to the unpaid balance of the Loan and you will pay
interest on those amounts at the same rate you agreed to pay on
the Loan. We may receive payments in connection with the
insurance from a company which provides the insurance. We may
monitor our loans for the purpose of determining whether you and
other borrowers have complied with the insurance requirements of
our loan agreements or may engage others to do so. The insurance
charge added to the Loan may include (1) the insurance company's
payments to us and (2) the cost of determining compliance with the
insurance requirements. If we add amounts for taxes, fees or
insurance to the unpaid balance of the Loan, we may increase your
payments to pay the amount added within the term of the
insurance or term of the Loan.
7. INSURANCE NOTICE - If you do not purchase the required
property insurance, the insurance we may purchase and charge you
for will cover only our interest in the Property. The premium for
this insurance may be higher because the insurance company may
have given us the right to purchase insurance after uninsured
collateral is lost or damaged. The insurance will not be liability
insurance and will not satisfy any state financial responsibility or no
fault laws.
8. DEFAULT - You will be in default if you break any promise you
make or fail to perform any obligation you have under this
Agreement. You will also be in default under this Agreement if the
Loan is in default. You will be in default if any property you have
given us as security is repossessed by someone else, seized under
a forfeiture or similar law, or if anything else happens that
significantly affects the value of the property or our security
interest in it.
9. WHAT HAPPENS IF YOU ARE IN DEFAULT - When you are in
default, we may demand immediate payment of the outstanding
balance of the Loan without giving you advance notice and take
possession of the Property. You agree the Credit Union has the
right to take possession of the Property without judicial process if
this can be done without breach of the peace. If we ask, you
promise to deliver the Property at a time and place we choose. If
the property is a motor vehicle or boat, you agree that we may
obtain a key or other device necessary to unlock and operate it,
when you are in default. We will not be responsible for any other
property not covered by this Agreement that you leave inside the
Property or that is attached to the Property. We will try to return
that property to you or make it available for you to claim.
After we have possession of the Property, we can sell it and apply
the money to any amounts you owe us. We will give you notice of
any public disposition or the date after which a private disposition
will be held. Our expenses for taking possession of and selling the
Property will be deducted from the money received from the sale.
Those costs may include the cost of storing the Property, preparing
it for sale and attorney's fees to the extent permitted under state
law or awarded under the Bankruptcy Code.
If you have agreed to pay the Loan, you must pay any amount that
remains unpaid after the sale money has been applied to the unpaid
balance of the Loan and to what you owe under this Agreement.
You agree to pay interest on that amount at the same rate as the
Loan until that amount has been paid.
10. DELAY IN ENFORCING RIGHTS AND CHANGES IN THE LOAN We can delay enforcing any of our rights under this Agreement any
number of times without losing the ability to exercise our rights
later. We can enforce this Agreement against your heirs or legal
representatives. If we change the terms of the Loan, you agree that
this Agreement will remain in effect.
11. CONTINUED EFFECTIVENESS - If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in
effect.
12. NOTICE TO NORTH DAKOTA BORROWERS PURCHASING A
MOTOR VEHICLE - THE MOTOR VEHICLE IN THIS TRANSACTION
MAY BE SUBJECT TO REPOSSESSION. IF IT IS REPOSSESSED
AND SOLD TO SOMEONE ELSE, AND ALL AMOUNTS DUE TO THE
SECURED PARTY ARE NOT RECEIVED IN THAT SALE, YOU MAY
HAVE TO PAY THE DIFFERENCE.
13. NOTICE FOR ARIZONA OWNERS OF PROPERTY - It is unlawful
for you to fail to return a motor vehicle that is subject to a security
interest, within thirty days after you have received notice of
default. The notice will be mailed to the address you gave us. It is
your responsibility to notify us if your address changes. The
maximum penalty for unlawful failure to return a motor vehicle is
one year in prison and/or a fine of $150,000.00.
The following notice applies ONLY when the box at left is marked.
53
54
55
56
57
58
59
14. NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT 60
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES
WHICH THE DEBTOR COULD ASSERT AGAINST THE
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT
HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY
HEREUNDER BY THE DEBTOR SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR HEREUNDER.
15. OTHER PROVISIONS -
61
NXX01A-e
Closed-End Consumer Lending User Guide
34
Page 4 instructions
Security Agreement Section
47. The Security For the Loan – This paragraph grants your credit union a security interest in
the property described in the “Security” section of the Truth in Lending Disclosure. It is very
important that you thoroughly describe the collateral in the Truth in Lending Disclosure. It also
permits your credit union a security interest in accessions, proceeds of the collateral and allows
you to obtain additional collateral if the market value of the collateral declines.
48.What the Security Interest Covers – This paragraph states that the property described in the
Truth in Lending Disclosure secures this loan. The security for the loan will also be security for
other debts with the credit union, now and in the future, unless the property is a dwelling. This is
known as a “cross-collateral” clause. However, if the property is household goods as defined by
Federal Trade Commission Credit Practices Rule, the property can only secure this loan and not
other loans or amounts owed to the credit union.
49.Ownership of the Property – This paragraph describes the borrower’s ownership rights. This
clause explains that a borrower can be considered in default if they sign the Security Agreement
and they do not own the collateral shown in the “Security” section of the Truth in Lending
Disclosure. It outlines that the borrower cannot sell the collateral or give anyone else a security
interest in it until the debt has been paid, nor can they allow any other security interest or lien to
be attached to the property.
50.Protecting the Security Interest – This paragraph requires the borrower to promise to assist
the credit union in any way to protect the security interest. It also requires the borrower to
identify your credit union as lien holder on the title and requires the borrower to sign a financing
statement, if necessary.
51. Use of Property – This paragraph outlines the responsibilities of the borrower to maintain the
collateral.
52.Property Insurance, Taxes and Fees – This paragraph contains information about taxes, fees
and property insurance on the collateral. The borrower is required to pay all taxes and fees
plus insure the property and name the credit union as loss payee on an insurance policy. Any
amounts spent by your credit union on taxes, fees or property insurance can be added to the
loan balance and be subject to interest at the same rate as the original loan. Your credit union
has the option of increasing the borrower’s payment to the extent necessary to repay the loan in
the original scheduled term or extend the term of the loan to repay these amounts.
53.Insurance Notice – This paragraph states that if your borrower does not purchase property
insurance, your credit union can purchase and charge your borrower for insurance that covers
only your credit union’s interest in the property.
54.Default – Article 9 of the Uniform Commercial Code (UCC) does not define default, so the
contract must define this term. Default is defined as breaking any promise or failing to perform
any obligation under this Security Agreement or the LOANLINER Loan and Security Agreements
and Disclosure Statement.
Closed-End Consumer Lending User Guide
35
Page 4 instructions (continued)
55.What Happens if you are in Default – This paragraph describes your credit union’s rights if the
property is in default. It gives your credit union the right to accelerate the debt and repossess the
collateral upon default. It establishes the right to sell the repossessed property and to pass any
costs involved onto your borrowers. Lastly, it requires your borrower to pay any remaining loan
balance after the sale money has been applied. If you are required to give the borrower a right to
cure the default, be sure to follow state law requirements on the timing and content of the notice.
56. Delay in Enforcing Rights and Changes in the Loan – This statement provides that your
credit union can delay enforcing any rights under this Agreement without losing the ability to
exercise those rights later.
57. Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, the remainder of the Agreement is still in effect.
58.Notice to North Dakota Borrowers Purchasing a Motor Vehicle – This paragraph states that
a motor vehicle may be subject to repossession for North Dakota borrowers. This notice will only
appear on the document used for North Dakota borrowers.
59. Notice for Arizona Owners of Property – This paragraph describes responsibilities for Arizona
owners of property when in default on a motor vehicle. This notice will only appear on the
document used for Arizona borrowers.
60. Consumers’ Claims and Defenses Notice – Whenever your credit union is selling a
repossessed vehicle and financing it, the checkbox for the “Consumers’ Claims and Defenses
Notice” should be checked. The Consumers’ Claims and Defenses Notice may also be required
in other situation where the credit union has a business relationship with the seller of goods.
61.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Closed-End Consumer Lending User Guide
36
Chapter 4:
Dwelling Fixed Loan and Security Agreements and
Disclosure Statement
Document Description – Electronic format
When Used:
This document is used when a borrower has been approved for a fixed
rate closed-end loan secured by a dwelling that is personal property
(such as a mobile home in a park).
Purpose:
The Loan and Security Agreements and Disclosure Statement provide:
1. disclosures required by Regulation Z
2. contract terms between the credit union and the borrower(s)
All Truth in Lending disclosures are given in the “Fed Box” area. The
Loan Agreement and Security Agreement are separate agreements.
Document
Number:
NXX04*
How distributed:
A copy of this document must be given to a borrower (if joint borrowers,
only one needs to receive a copy).
State-specific
versions:
Florida, Iowa, Louisiana, New Hampshire, Right to Cure, Virginia and
Wisconsin
*Indicates spaceholder for version number
Closed-End Consumer Lending User Guide
37
Page 1 sample
1
Loan and Security Agreements
and Disclosure Statement
LOAN DATE
LOAN NUMBER
2
ACCOUNT NUMBER
3
BORROWER 1
NAME AND ADDRESS
GROUP POLICY NUMBER
4
5
MATURITY DATE
6
BORROWER 2
NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)
7
TRUTH IN LENDING DISCLOSURE 'e' means an estimate
ANNUAL PERCENTAGE RATE
FINANCE CHARGE
Amount Financed
Total of Payments
Total Sale Price
The cost of your credit as a yearly rate.
The dollar amount the
credit will cost you.
The amount of credit
provided to you or on
your behalf.
The amount you will have
paid after you have made
all payments as scheduled.
The total cost of your purchase on credit is
8
$
%
$
9
$
10
$
which includes your
downpayment of $
11
12
.
Prepayment: If you pay off early you will not have to
pay a penalty.
18
INTEREST RATE AND PAYMENT SUMMARY
Rate & Monthly Payment Required Deposit: The Annual Percentage Rate does
Interest Rate
13
Principal + Interest Payment
$
14
Est. Taxes + Insurance (Escrow)
(Includes Private Mortgage Insurance)
$
15
Total Est. Monthly Payment
$
not take into account your required deposit, if any.
%
19
Property Insurance: You may obtain property
insurance from anyone you want that is acceptable to
the Credit Union. If you get the insurance from us,
you will pay $ 20
Assumption: Someone buying your dwelling cannot
assume the remainder of the loan on the original
terms. 21
Non-Filing Insurance
There is no guarantee that you will be able to refinance to lower your Filing Fees
16
rate and payments.
$
Balloon Payment (Check if applicable) 17 Final Balloon Payment due
22
23
$
$
Late Charge:
24
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your
shares and dividends and, if any, your deposits and interest in the Credit Union; and the property described below:
Collateral
Value
Property/Model/Make
Key Number
Type
Year I.D. Number
$
$
$
25
Other (Describe)
Pledge of Shares $
in Account No.
$
in Account No.
See your contract documents for any additional information about nonpayment, default, and any required repayment in full before the
scheduled date.
26
27
SIGNATURES
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is
described in the "Security" section of the Truth in Lending Disclosure, you also agree to the terms of the Security
Agreement. If you sign, or otherwise authenticate, as "Owner of Property" you agree only to the terms of the Security
Agreement.
CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
Borrower 1 Signature
Borrower 2 Signature
Date
X
Date
X
(Seal)
(Seal)
28
Signature
Date
X
Other Borrower
(Seal)
Owner of Property
Witness
Signature
Date
X
Other Borrower
CUNA Mutual Group 2011 All Rights Reserved
Closed-End Consumer Lending User Guide
(Seal)
Owner of Property
Witness
NXX042-e
38
Page 1 instructions
Please refer to the document on the preceding pages for the corresponding numbers.
1. C
redit Union Information – This space is used to identify the credit union as required by
Regulation Z, Section 1026.18(a). Have your data processor set up your credit union’s name,
address, telephone number and logo to print.
2. Loan Date – Date of current loan.
3. Loan Number – Loan identification number as defined by the credit union.
4. Account Number – Member account number.
5.Group Policy Number – Enter the credit union’s contract number as defined by CUNA Mutual
Group.
6.Maturity Date – Enter maturity date of loan.
7.Borrower 1 Name and Address/Borrower 2 Name and Address – Name and address of each
borrower.
Truth in Lending Disclosure Section
The Truth in Lending Act requires certain disclosures be segregated from other information on a
closed-end lending document per Regulation Z, Section 1026.17(a). The area labeled “Truth in
Lending Disclosure” is referred to as the “Fed Box.” The Truth in Lending Disclosure contains the
following items:
8. A
nnual Percentage Rate – Your credit union completes the APR for the loan requested,
Regulation Z, Sections 1026.18(e) and 1026.22.
Note:The APR will be the simple interest rate when the only finance charge is interest. If finance
charges other than interest are to be included, the APR will be different than the simple interest
rate and must be calculated using a calculation device sufficiently sophisticated to correctly
compute the correct APR. Examples of finance charges on consumer loans include:
a) credit report fees
b) loan processing fees
c) mandatory residual value insurance (RVI)
d) mandatory GAP coverage
9. F
inance Charge – Your credit union completes the total finance charge for the loan as required
by Regulation Z, Section 1026.18(d).
Note: Any prepaid finance charge should be included in this amount. Do not put an ‘e’ for
estimate in this box. The Disclosure should be completed with the total finance charge known at
the time of disclosure.
Closed-End Consumer Lending User Guide
39
Page 1 instructions (continued)
10. Amount Financed – Regulation Z, Section 1026.18(b) requires that the amount financed be
calculated in the following way:
a) Start with the principal loan amount.
b)Add other amounts that are financed by the lender and are not part of the finance charge.
Level rate and monthly renewable credit insurance is not financed; therefore, the cost for
this insurance should not be included in the “Amount Financed” section. Single premium
insurance is financed and will be included in this amount.
c) Subtract any prepaid finance charge.
11. T
otal of Payments – The sum of the payments for the loan, Regulation Z, Section 1026.18(h).
The total payments will be based on the contractual payment shown in paragraph one of the
Note.
12.Total Sales Price – Regulation Z, Section 1026.18(j) requires this disclosure be used whenever
your credit union is both the seller and the creditor. This is most likely to happen when you are
selling a repossessed vehicle. In this section you must disclose both the total sale price and the
downpayment amount, if any.
The total sale price is the sum of the:
a) cash price
b) amounts that are financed but not finance charges
c) finance charge
13.Interest Rate – Regulation Z, Section 1026.18(s)(2)(i)(A) requires the disclosure of the interest
rate at consummation.
14.Principal + Interest Payment – Section 1026.18(s)(3)(i)(A) states if all periodic payments are
applied to accrued interest and principal, then the corresponding periodic principal and interest
payment is to be disclosed.
15.Estimated Taxes + Insurance (Escrow) (Includes Private Mortgage Insurance) – Regulation
Z, Section 1026.18(s)(3)(i)(C) states that if an escrow account is required, an estimate of the
amount of taxes and insurance, including any mortgage insurance, is to be provided.
16. Total Estimate Monthly Payment – Regulation Z, Section 1026.18(s)(3)(i)(D) requires the sum
of the amounts above disclosed as Total Estimated Monthly Payment. This figure cannot include
any credit insurance or debt protection amounts.
17.Balloon Payment – Regulation Z, Section 1026.18(s)(5)(i) states that if the transaction requires
a balloon payment, the due date and balloon payment amount need to be disclosed outside the
table.
18.Prepayment – Regulation Z, Section 1026.18(k) requires disclosure of any prepayment penalty.
The language in the LOANLINER documents prohibits a prepayment penalty.
19.Required Deposit – Per Regulation Z, Section 1026.18(r) and footnote 45, this language is
required when the borrower must maintain a deposit as a condition of the loan.
Closed-End Consumer Lending User Guide
40
Page 1 instructions (continued)
20. Property Insurance – If your credit union sells property insurance, enter the amount of the
insurance premium. The term of the insurance must also be disclosed if it is less than the term of
the loan, Regulation Z, Section 1026.18(n).
21.Assumption – Since most credit unions do not allow loans to be assumed, this statement
informs the borrowers that the loan cannot be assumed. Regulation Z, Section 1026.18(q).
22.Filing Fees – If you pass on the cost of filing fees (for example, a lien filing fee) to borrowers,
whether directly or indirectly, you must disclose the cost — even if the borrower pays the fee in
cash to the credit union or a third party. This fee is not a finance charge if you only pass on the
actual cost charged by government officials, Regulation Z, Section 1026.18(o).
23.Non-Filing Insurance – Enter the dollar amount of the non-filing insurance. This insurance
premium is used to perfect the lien in lieu of actually filing the security interest, Regulation Z,
Section 1026.18(o).
24.Late Charge – The late charge is any dollar or percentage charge that may be imposed before
maturity due to a late payment. This language is provided by the credit union and may be printed
on the documents, Regulation Z, Section 1026.18(l).
25.Security – The statement “Collateral securing other loans with the credit union may also
secure this loan” is printed to disclose the existence of a cross-collateral clause in the Security
Agreement. The statement “You are giving a security interest in your shares and dividends and,
if any, your deposits and interest in the credit union; and the property described below:” discloses
that shares/deposits are also offered to secure the loan. The description of the collateral must
be included here since this portion of the Truth in Lending Disclosure also is part of the Security
Agreement. A complete description of collateral should be shown. Also, additional security
offered should be disclosed in the “other” field. For Pledge of Shares, enter the amount and
account number for share secured loans.
26.Contract Reference – This is a statement per Regulation Z, Section 1026.18(p) that the
consumer should refer to the appropriate contract documents for information about nonpayment,
default and prepayment penalties, and rebates.
Signatures Section
27.Signature Section – This area contains signature language that will vary on some documents
due to state law variations.
28.Borrower’s Signature – The borrower signs, or otherwise authenticates the Loan and Security
Agreements and Disclosure Statement in this area. Additional signatures may be obtained using
these areas. By signing, or otherwise authenticating as a borrower, a person is agreeing to the
Loan and Security Agreements. If the owner of the property is not a borrower, the box “Owner of
Property” should be checked. (This is the ONLY situation when this box should be checked.) The
owner of property is agreeing only to the terms of the Security Agreement. A witness may also
sign here. A witness signature is not required under the Truth in Lending Act.
Closed-End Consumer Lending User Guide
41
Page 2 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$
Amount Given to You Directly
29
$
30
Amount Paid on Your Account
$
31
Prepaid Finance Charge
$
32
Amounts Paid to Others on Your Behalf: (If an amount is marked with an asterisk (*) we will be retaining a portion of the amount.)
$
$
$
$
$
$
$
To
To
To
To
To
To
To
$
$
$
$
$
$
$
33
To
To
To
To
To
To
To
LOAN AGREEMENT
In this Loan Agreement ("Agreement") all references to "Credit Union," "we," "our," or "us," mean the Credit Union whose name
appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you" or "your" mean each
person who signs, or otherwise authenticates, this Agreement as a borrower.
1.
PROMISE TO PAY - You promise to pay $
to the Credit Union plus interest on the unpaid balance until what you owe
34
has been repaid. The interest rate is
% per year. You will pay principal and interest by making payments each month. Your
initial monthly payment will be in the amount of U.S. $
. You will make payments on the
day of each month
beginning on
. You will make these payments every month until you have paid all of the principal and interest and any other
charges, described below, that you may owe under this Note. If, on
, you still owe amounts under this Note, you will pay
all amounts in full on that date.
35 Collection Costs:
36 2. PAYMENTS - If you elect voluntary payment protection, we will
include the premium or program fee in your payments. If you
subsequently elect voluntary payment protection, we will either
include the premium or program fee in your payments or extend
the term of your loan. If the term is extended, you will be required
to make additional payments of the scheduled amount, until what
you owe has been paid. You may prepay any amount without
penalty. If you prepay any part of what you owe, you are still
required to make the regularly scheduled payments, unless we
have agreed to a change in the due date. Because this is a simple
interest loan, if you do not make payments exactly on the due
date, your final payment may be more or less than the amount of
the final payment that is disclosed. You promise to make all
payments to the place we choose. If this loan refinances another
loan we have with you, the other loan will be canceled and
refinanced as of the date of this loan. Unless otherwise required
by law, payments will be applied to amounts owed in the manner
we choose.
37 3. LOAN PROCEEDS BY MAIL - If the proceeds of this loan are
mailed to you, interest on this loan begins on the date the loan
proceeds are mailed to you.
38 4. SECURITY FOR LOAN - This Agreement is secured by all
property described in the "Security" section of the Truth in Lending
Disclosure. Property securing other loans you have with us also
secures this loan, unless the property is a dwelling. In addition to
your pledge of shares, we may also have what is known as a
statutory lien on all individual and joint accounts you have with us.
A statutory lien means we have the right under federal law and
many state laws to claim an interest in your accounts. We can
enforce a statutory lien against your shares and dividends, and if
any, interest and deposits, in all individual and joint accounts you
have with us to satisfy any outstanding financial obligation that is
due and payable to us. We may exercise our right to enforce this
lien without further notice to you, to the extent permitted by law.
For all borrowers: You pledge as security for this loan all shares
and dividends and, if any, all deposits and interest in all joint and
individual accounts you have with the Credit Union now and in the
future. The statutory lien and/or your pledge will allow us to apply
the funds in your account(s) to what you owe when you are in
default. The statutory lien and your pledge do not apply to any
Individual Retirement Account or any other account that would
lose special tax treatment under state or federal law if given as
security.
39 5. DEFAULT - You will be in default under this Agreement if you
do not make a payment of the amount required on or before the
date it is due. You will be in default if you break any promise you
made in connection with this loan or if anyone is in default under
any security agreement made in connection with this Agreement.
You will be in default if you die, file for bankruptcy, become
insolvent (that is, unable to pay your bills and loans as they
become due), or if you made any false or misleading statements in
your loan application. You will also be in default if something
happens that we believe may seriously affect your ability to repay
what you owe under this Agreement or if you are in default under
any other loan agreement you have with us.
6. ACTIONS AFTER DEFAULT - When you are in default, we may
demand immediate payment of the entire unpaid balance under this
Agreement. You waive any right you have to receive demand for
payment, notice of intent to demand immediate payment and notice
of demand for immediate payment. If we demand immediate
payment, you will continue to pay interest at the rate provided for in
this Agreement, until what you owe has been repaid. We will also
apply against what you owe any shares and/or deposits given as
security under this Agreement. We may also exercise any other
rights given by law when you are in default.
7. EACH PERSON RESPONSIBLE - Each person who signs, or
otherwise authenticates, this Agreement will be individually and
jointly responsible for paying the entire amount owed under this
Agreement. This means we can enforce our rights against any one
of you individually or against all of you together.
8. LATE CHARGE - If you are late in making a payment, you
promise to pay the late charge shown in the Truth in Lending
Disclosure. If no late charge is shown, you will not be charged one.
9. DELAY IN ENFORCING RIGHTS - We can delay enforcing any of
our rights under this Agreement any number of times without losing
the ability to exercise our rights later. We can enforce this
Agreement against your heirs or legal representatives.
10. CONTINUED EFFECTIVENESS - If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in
effect.
11. NOTICES - Notices will be sent to you at the most recent
address you have given us in writing. Notice to any one of you will
be notice to all.
12. USE OF ACCOUNT - You promise to use your account for
consumer (personal, family or household) purposes, unless the
Credit Union gives you written permission to use the account also
for agricultural or commercial purposes, or to purchase real estate.
13. NO ORAL AGREEMENTS -- THIS NOTE CONSTITUTES A
"WRITTEN LOAN AGREEMENT" PURSUANT TO SECTION 26.02
OF THE TEXAS BUSINESS AND COMMERCE CODE, IF SUCH
SECTION APPLIES.
THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
14. OTHER PROVISIONS -
40
41
42
43
44
45
46
47
48
NXX042-e
Closed-End Consumer Lending User Guide
42
Page 2 instructions
Itemization of Amount Financed Section
29. Itemization of Amount Financed – Enter amount the borrower financed per Regulation Z,
Section 1026.18(c). This is the amount shown in the “Amount Financed” box.
30.Amount Given to You Directly – Enter the amount of money given to the borrower in the form
of cash or a check, as well as funds placed in an asset account. (Asset accounts include, but are
not limited to, share accounts, share draft accounts, etc.)
Note: If a check is made out to the borrower and another party, this amount is to be included in
this box. You don’t have to show the other party in the section “Amounts Paid to Others on your
Behalf,” Regulation Z, Official Staff Interpretation, paragraph 18(c)(1)(i) - 1. Amounts paid to
Consumer.
31.Amount Paid on Your Account – This is the amount your credit union will use to pay off
an existing loan balance. This section would include a payment of an existing loan balance
(principal and accrued interest) on a prior loan. Only amounts paid to loan accounts should be
shown here, Regulation Z, Section 1026.18(c)(1)(ii).
32.Prepaid Finance Charge – Prepaid finance charges include any portion of the finance charge
paid prior to or at closing or settlement. They may be paid in cash or financed and withheld
from the proceeds. Some common examples include: service fees, loan fees, loan guarantee
insurance, credit report fees, residual value insurance and mandatory GAP coverage. Prepaid
finance charges are subtracted from the amount financed and added to the finance charge for
disclosure purposes. This will result in an APR that is different than the contractual interest rate.
33.Amount Paid to Others on Your Behalf – These boxes are provided to disclose amounts
paid to other persons by the credit union on the borrower’s behalf. These persons must be
identified by name except that payments to government agencies, public officials, credit report
agencies, appraisers and insurance companies may be generically identified with phrases like
“credit bureau” or “state agency.” If loan checks are made payable to a third party only, and not
the borrower, the amount of the payment and the name of the third party must be disclosed,
Regulation Z, Section 1026.18(c)(1)(iii).
Note: The level rate or monthly renewable credit disability/credit life costs or amounts need not
be disclosed in this section.
This section includes a sentence which reads as follows: If an amount is marked with an
asterisk(*), we will be retaining a portion of the amount. An asterisk should be used whenever
the borrower is financing a product for which the credit union imposes an “upcharge.” Typically,
if the credit union sells mechanical repair coverage (MRC) or extended warranties and retains
a portion of the amount, then an asterisk will be needed. An example would be if the borrower
purchased an extended warranty from the credit union. The warranty may cost the credit union
$300.00, but the credit union charges the borrower $400.00. The $100.00 difference is an
“upcharge” on this product. The credit union needs to disclose that it is retaining a portion of the
$400.00 that is being charged to the borrower.
Closed-End Consumer Lending User Guide
43
Page 2 instructions (continued)
Loan Agreement Section
34.Promise to Pay – This is the contractual promise to repay the principal loan amount plus
interest. Your credit union should enter the principal amount borrowed and when payments
are due in the promise to pay. The contractual interest rate used to amortize the loan may be
different than the APR if there are prepaid finance charges as part of the loan.
35.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are to be disclosed. This language may be imprinted.
36.Payments – This is the borrower’s promise to make payments as specified in the Truth in
Lending Disclosure. This paragraph also discloses to the borrower that there is no prepayment
penalty and if payments are not made as scheduled, the final payment may be more or less
than the final payment that was disclosed. Also, if voluntary payment protection is elected, the
premium or program fees may be included in the payment or the loan term will be extended.
37.Loan Proceeds By Mail – This is an explanation that interest begins on the date the loan
proceeds are mailed, if this loan is transacted through the mail.
38.Security For Loan – Regulation Z, Section 1026.18(m) requires that the creditor disclose the
fact that it will acquire a security interest in the property purchased or in other property identified
by item or type. The LOANLINER Loan Agreement discloses that the loan is secured by all items
described in the “Security” section of the Truth in Lending Disclosure.
The loan also is secured by property securing other loans with the credit union.
Much of this section deals with a statutory lien. A statutory lien is applicable to federal and
many state-chartered credit unions. In 1999, NCUA issued regulations that required federal
credit unions to disclose statutory liens in a certain manner. If a borrower’s loan is in default,
the statutory lien allows your credit union to apply the balance of shares and dividends in all
individual and joint accounts with your credit union to satisfy the obligation.
There is also a general pledge of shares in this section, which allows your credit union to apply
the funds in your borrower’s account(s) to what they owe when they are in default. This pledge
is considered additional security for all loans. The pledge does not apply to IRAs or any other
account that would lose special tax treatment under state or federal law if given as security. As
long as your borrower is making payments and the loan is not share secured, your borrower has
access to his/her shares and/or deposits.
Note: For state-chartered credit unions located in states where statutory liens are not allowed,
the general pledge of shares would apply.
39. Default – This paragraph describes the elements of default and allows your credit union to
accelerate the unpaid balance in the event of default. The default language will vary by version
due to state law requirements. Be sure to read this paragraph before deciding whether you can
call a loan in default. If you have questions, consult your legal counsel.
Closed-End Consumer Lending User Guide
44
Page 2 instructions (continued)
40.Actions After Default – This section includes a statement allowing the credit union to accelerate
the unpaid balance in the event of default. If this paragraph gives the borrower a right to cure
the default, be sure you comply with the applicable state law on timing and content of the Right
to Cure Notice. When a debt is accelerated, interest will continue on the unpaid balance at
the same rate. Lastly, your credit union may exercise any other rights given by law when your
borrower is in default.
41.Each Person Responsible – This paragraph explains that each person who signs, or otherwise
authenticates the Loan Agreement will be held individually and jointly responsible for paying the
entire amount owed under the Agreement.
42.Late Charge – This paragraph explains that if your borrower is late in making a payment, they
promise to pay the late charge shown in the Truth in Lending Disclosure, if one is disclosed.
43. Delay in Enforcing Rights – This statement provides that your credit union can delay enforcing
any rights under this Agreement without losing the ability to exercise those rights later.
44.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, that the remainder of the Agreement remains in effect.
45.Notices – This paragraph states that your credit union will send notices to the most recent
address your borrower gave your credit union in writing and that notice to one is notice to all.
46.Use of Account – This paragraph was added to the Loan Agreement due to the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) which gave the credit union
protection against court-ordered reduction (cramdown) of a secured balance due on purchasemoney secured debt acquired for personal, family or household purposes. This provision will
prove a vehicle was purchased for personal use.
47. No Oral Agreements – This paragraph applies to Texas transactions and confirms that the rights
and obligations of the borrower and lender shall be determined solely from the written Loan
Agreements and any prior oral agreements between the lender and borrower are superseded by
the Loan Agreement.
48.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Closed-End Consumer Lending User Guide
45
To create these samples, pull the pdf into an InDesign file and add the circles to a seperate layer. Now make a high res pdf of
the form with circle numbers to use as a graphic for the manual. (maz)
Page 3 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
SECURITY AGREEMENT
49
50
51
52
53
54
In this Agreement all references to "Credit Union," "we," "our" or
"us" mean the Credit Union whose name appears on this
document and anyone to whom the Credit Union assigns or
transfers this Agreement. All references to the "Loan" mean the
loan described in the Loan Agreement that is part of this
document. All references to "you" or "your" mean any person who
signs, or otherwise authenticates, this Agreement.
1. THE SECURITY FOR THE LOAN - You give us what is known as
a security interest in the property described in the "Security"
section of the Truth in Lending Disclosure that is part of this
document ("the Property"). The security interest you give includes
all accessions. Accessions are things which are attached to or
installed in the Property now or in the future. The security interest
also includes any replacements for the Property which you buy
within 10 days of the Loan and any extensions, renewals or
refinancings of the Loan. It also includes any money you receive
from selling the Property or from insurance you have on the
Property. If the value of the Property declines, you promise to give
us more property as security if asked to do so.
2.
WHAT
THE
SECURITY
INTEREST
COVERS/CROSS
COLLATERAL PROVISIONS - The security interest secures the
Loan and any extensions, renewals or refinancings of the Loan. If
the Property is not a dwelling, the security interest also secures
any other loans, including any credit card loan, you have now or
receive in the future from us and any other amounts you owe us
for any reason now or in the future, except any loan secured by
your principal residence. If the Property is household goods as
defined by the Federal Trade Commission Credit Practices Rule or
your principal residence, the Property will secure only this Loan
and not other loans or amounts you owe us.
3. OWNERSHIP OF THE PROPERTY - You promise that you own
the Property or, if this Loan is to buy the Property, you promise
you will use the Loan proceeds for that purpose. You promise that
no one else has any interest in or claim against the Property that
you have not already told us about. You promise not to sell or
lease the Property or to use it as security for a loan with another
creditor until the Loan is repaid. You promise you will allow no
other security interest or lien to attach to the Property either by
your actions or by operation of law.
4. PROTECTING THE SECURITY INTEREST - If your state issues a
title for the Property, you promise to have our security interest
shown on the title. We may have to file what is called a financing
statement to protect our security interest from the claims of
others. You irrevocably authorize us to execute (on your behalf), if
applicable, and file one or more financing, continuation or
amendment statements pursuant to the Uniform Commercial Code
(UCC) in a form satisfactory to us. You promise to do whatever
else we think is necessary to protect our security interest in the
Property. You also promise to pay all costs, including but not
limited to any attorney fees, we incur in protecting our security
interest and rights in the Property, to the extent permitted by
applicable law.
5. USE OF PROPERTY - Until the Loan has been paid off, you
promise you will: (1) Use the Property carefully and keep it in good
repair. (2) Obtain our written permission before making major
changes to the Property or changing the address where the
Property is kept. (3) Inform us in writing before changing your
address. (4) Allow us to inspect the Property. (5) Promptly notify
us if the Property is damaged, stolen or abused. (6) Not use the
Property for any unlawful purpose. (7) Not retitle Property in
another state without telling us.
6. PROPERTY INSURANCE, TAXES AND FEES - You promise to
pay all taxes and fees (like registration fees) due on the Property
and to keep the Property insured against loss and damage. The
amount and coverage of the property insurance must be
acceptable to us. You may provide the property insurance through
a policy you already have, or through a policy you get and pay for.
You promise to make the insurance policy payable to us and to
deliver the policy or proof of coverage to us if asked to do so.
If you cancel your insurance and get a refund, we have a right to
the refund. If the Property is lost or damaged, we can use the
insurance settlement to repair the Property or apply it towards
what you owe. You authorize us to endorse any draft or check
which may be payable to you in order for us to collect any refund
or benefits due under your insurance policy.
If you do not pay the taxes or fees on the Property when due or
keep it insured, we may pay these obligations, but we are not
required to do so. Any money we spend for taxes, fees or
insurance will be added to the unpaid balance of the Loan and you
will pay interest on those amounts at the same rate you agreed to
pay on the Loan. We may receive payments in connection with the
insurance from a company which provides the insurance. We may
monitor our loans for the purpose of determining whether you and
other borrowers have complied with the insurance requirements of
our loan agreements or may engage others to do so. The insurance
charge added to the Loan may include (1) the insurance company's
payments to us and (2) the cost of determining compliance with the
insurance requirements. If we add amounts for taxes, fees or
insurance to the unpaid balance of the Loan, we may increase your
payments to pay the amount added within the term of the insurance
or term of the Loan.
7. INSURANCE NOTICE - If you do not purchase the required
property insurance, the insurance we may purchase and charge you
for will cover only our interest in the Property. The premium for this
insurance may be higher because the insurance company may have
given us the right to purchase insurance after uninsured collateral is
lost or damaged. The insurance will not be liability insurance and
will not satisfy any state financial responsibility or no fault laws.
8. DEFAULT - You will be in default if you break any promise you
make or fail to perform any obligation you have under this
Agreement. You will be in default if any property you have given us
as security is repossessed by someone else, seized under a
forfeiture or similar law, or if anything else happens that
significantly affects the value of the property or our security
interest in it. You will also be in default under this Agreement if the
Loan is in default.
9. WHAT HAPPENS IF YOU ARE IN DEFAULT - When you are in
default, we may demand immediate payment of the outstanding
balance of the Loan without giving you advance notice and take
possession of the Property. You agree the Credit Union has the right
to take possession of the Property without judicial process if this
can be done without breach of the peace. If we ask, you promise to
deliver the Property at a time and place we choose. If the property
is a motor vehicle or boat, you agree that we may obtain a key or
other device necessary to unlock and operate it, when you are in
default. We will not be responsible for any other property not
covered by this Agreement that you leave inside the Property or
that is attached to the Property. We will try to return that property
to you or make it available for you to claim.
After we have possession of the Property, we can sell it and apply
the money to any amounts you owe us. We will give you notice of
any public disposition or the date after which a private disposition
will be held. Our expenses for taking possession of and selling the
Property will be deducted from the money received from the sale.
Those costs may include the cost of storing the Property, preparing
it for sale and attorney's fees to the extent permitted under state
law or awarded under the Bankruptcy Code.
If you have agreed to pay the Loan, you must pay any amount that
remains unpaid after the sale money has been applied to the unpaid
balance of the Loan and to what you owe under this Agreement.
You agree to pay interest on that amount at the same rate as the
Loan until that amount has been paid.
10. DELAY IN ENFORCING RIGHTS AND CHANGES IN THE LOAN We can delay enforcing any of our rights under this Agreement any
number of times without losing the ability to exercise our rights
later. We can enforce this Agreement against your heirs or legal
representatives. If we change the terms of the Loan, you agree that
this Agreement will remain in effect.
11. CONTINUED EFFECTIVENESS - If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in
effect.
12. NORTH DAKOTA NOTICE TO BORROWERS PURCHASING A
MOTOR VEHICLE - THE MOTOR VEHICLE IN THIS TRANSACTION
MAY BE SUBJECT TO REPOSSESSION. IF IT IS REPOSSESSED
AND SOLD TO SOMEONE ELSE, AND ALL AMOUNTS DUE TO THE
SECURED PARTY ARE NOT RECEIVED IN THAT SALE, YOU MAY
HAVE TO PAY THE DIFFERENCE.
13. NOTICE FOR ARIZONA OWNERS OF PROPERTY - It is unlawful
for you to fail to return a motor vehicle that is subject to a security
interest, within thirty days after you have received notice of default.
The notice will be mailed to the address you gave us. It is your
responsibility to notify us if your address changes. The maximum
penalty for unlawful failure to return a motor vehicle is one year in
prison and/or a fine of $150,000.00.
The following notice applies ONLY when the box at left is marked.
14. NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES
WHICH THE DEBTOR COULD ASSERT AGAINST THE
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT
HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY
HEREUNDER BY THE DEBTOR SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR HEREUNDER.
15. OTHER PROVISIONS -
55
56
57
58
59
60
61
62
63
NXX042-e
Closed-End Consumer Lending User Guide
46
Page 3 instructions
Security Agreement Section
49. The Security For the Loan – This paragraph grants your credit union a security interest in
the property described in the “Security” section of the Truth in Lending Disclosure. It is very
important that you thoroughly describe the collateral in the Truth in Lending Disclosure. It also
permits your credit union a security interest in accessions, proceeds of the collateral and allows
you to obtain additional collateral if the market value of the collateral declines.
50.What the Security Interest Covers – This paragraph states that the property described in the
Truth in Lending Disclosure secures this loan. If the property is not a dwelling, then the security
for the loan will also be security for other debts with the credit union, now and in the future. This
is known as a “cross-collateral” clause. However, if the property is household goods as defined
by Federal Trade Commission Credit Practices Rule, the property can only secure this loan and
not other loans or amounts owed to the credit union.
51. Ownership of the Property – This paragraph describes the borrower’s ownership rights. This
clause explains that a borrower can be considered in default if they sign the Security Agreement
and they do not own the collateral shown in the “Security” section of the Truth in Lending
Disclosure. It outlines that the borrower cannot sell the collateral or give anyone else a security
interest in it until the debt has been paid, nor can they allow any other security interest or lien to
be attached to the property.
52.Protecting the Security Interest – This paragraph requires the borrower to promise to assist
the credit union in any way to protect the security interest. It also requires the borrower to
identify your credit union as lien holder on the title and requires the borrower to sign a financing
statement, if necessary.
53.Use of Property – This paragraph outlines the responsibilities of the borrower to maintain the
collateral.
54. Property Insurance, Taxes and Fees – This paragraph contains information about taxes, fees
and property insurance on the collateral. The borrower is required to pay all taxes and fees
plus insure the property and name the credit union as loss payee on an insurance policy. Any
amounts spent by your credit union on taxes, fees or property insurance can be added to the
loan balance and be subject to interest at the same rate as the original loan. Your credit union
has the option of increasing the borrower’s payment to the extent necessary to repay the loan in
the original scheduled term or extend the term of the loan to repay these amounts.
55. Insurance Notice – This paragraph states that if your borrower does not purchase property
insurance, your credit union can purchase and charge your borrower for insurance that covers
only your credit union’s interest in the property.
56.Default – Article 9 of the Uniform Commercial Code (UCC) does not define default, so the
contract must define this term. Default is defined as breaking any promise or failing to perform
any obligation under this Security Agreement or the LOANLINER Loan and Security Agreements
and Disclosure Statement.
Closed-End Consumer Lending User Guide
47
Page 3 instructions (continued)
57.What Happens if you are in Default – This paragraph describes your credit union’s rights if the
property is in default. It gives your credit union the right to accelerate the debt and repossess the
collateral upon default. It establishes the right to sell the repossessed property and to pass any
costs involved onto your borrowers. Lastly, it requires your borrower to pay any remaining loan
balance after the sale money has been applied. If you are required to give the borrower a right to
cure the default, be sure to follow state law requirements on the timing and content of the notice.
58. Delay in Enforcing Rights and Changes in the Loan – This statement provides that your
credit union can delay enforcing any rights under this Agreement without losing the ability to
exercise those rights later.
59.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, the remainder of the Agreement is still in effect.
60.Notice to North Dakota Borrowers Purchasing a Motor Vehicle – This paragraph states that
a motor vehicle may be subject to repossession for North Dakota borrowers. This notice will only
appear on the document used for North Dakota borrowers.
61. Notice for Arizona Owners of Property – This paragraph describes responsibilities for Arizona
owners of property when in default on a motor vehicle. This notice will only appear on the
document used for Arizona borrowers.
62. Consumers’ Claims and Defenses Notice – Whenever your credit union is selling a
repossessed vehicle and financing it, the checkbox for the “Consumers’ Claims and Defenses
Notice” should be checked. The Consumers’ Claims and Defenses Notice may also be required
in other situation where the credit union has a business relationship with the seller of goods.
63.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Closed-End Consumer Lending User Guide
48
Chapter 5:
Dwelling Variable Loan and Security Agreements and
Disclosure Statement
Document Description – Electronic format
When Used:
This document is used when a borrower has been approved for a
variable rate closed-end loan secured by a dwelling that is personal
property (such as a mobile home in a park).
Purpose:
The Loan and Security Agreements and Disclosure Statement provide:
1.disclosures required by Regulation Z.
2.contract terms between the credit union and the borrower(s)
ll Truth in Lending disclosures are given in the “Fed Box” area. The
A
Loan Agreement and Security Agreement are separate agreements.
Document
Number:
NXX06*
How distributed:
A copy of this document must be given to a borrower (if joint borrowers,
only one needs to receive a copy).
State-specific
versions:
Florida, Iowa, Louisiana, New Hampshire, Right to Cure, Virginia and
Wisconsin.
*Indicates spaceholder for version number
Closed-End Consumer Lending User Guide
49
Page 1 sample
1
Loan and Security Agreements
and Disclosure Statement
LOAN DATE
LOAN NUMBER
2
ACCOUNT NUMBER
3
BORROWER 1
NAME AND ADDRESS
GROUP POLICY NUMBER
4
MATURITY DATE
5
6
BORROWER 2
NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)
7
TRUTH IN LENDING DISCLOSURE 'e' means an estimate
ANNUAL PERCENTAGE RATE
The cost of your credit as a yearly rate.
8
%
FINANCE CHARGE
Amount Financed
Total of Payments
Total Sale Price
The dollar amount the credit
will cost you.
The amount of credit provided
to you or on your behalf.
The amount you will have
paid after you have made
all payments as scheduled.
The total cost of your purchase on
credit is $
which includes your
.
downpayment of $
12
$
9
$
10
$
11
Prepayment: If you pay off early you will not have to pay a penalty. 13
Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
14
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union.
If you get the insurance from the Credit Union you will pay $ 15
Assumption: Someone buying your dwelling cannot assume the remainder of the loan on the original terms. 16
Your loan contains a variable rate feature. Disclosures about the variable rate feature have been provided to you earlier.
INTRODUCTORY
MAXIMUM during
MAXIMUM EVER
INTEREST RATE
Rate & Monthly Payment
FIRST FIVE YEARS
(as early as
AND PAYMENT SUMMARY
(for first
)
)
Interest Rate
17
18
19
20
%
%
%
%
Principal + Interest Payment
$ 21
$ 22
Est. Taxes + Insurance (Escrow)
$ 24
$ 24
(Includes Private Mortgage Insurance)
Total Est. Monthly Payment
$ 25
$ 26
There is no guarantee that you will be able to refinance to lower your rate and payments.
Introductory Rate (Check only if Introductory rate is not based on Index plus margin.)
You have a discounted introductory rate of
% that ends after
In the
, even if market rates do not change, this rate will increase to
Balloon Payment (Check if applicable) Final Balloon Payment due 29
$
$ 23
$ 24
$ 27
.
Filing Fees
28
$
30
%. Non-Filing
Insurance
$
Late Charge:
31
32
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your
shares and dividends and, if any, your deposits and interest in the Credit Union; and the property described below:
Collateral
Value
Property/Model/Make
Type
Key Number
Year
I.D. Number
Other (Describe)
Pledge of Shares $
$
$
$
33
in Account No.
$
in Account No.
See your contract documents for any additional information about nonpayment, default, and any required repayment in full before the
34
scheduled date.
CUNA Mutual Group 2011 All Rights Reserved
Closed-End Consumer Lending User Guide
NXX061-e
50
Page 1 instructions
Please refer to the document on the preceding pages for the corresponding numbers.
1.Credit Union Information – This space is used to identify the credit union as required by
Regulation Z, Section 1026.18(a). Have your data processor set up your credit union’s name,
address, telephone number and logo to print.
2. Loan Date – Date of current loan.
3. Loan Number – Loan identification number as defined by the credit union.
4. Account Number – Member account number.
5.Group Policy Number – Enter the credit union’s contract number as defined by CUNA Mutual
Group.
6.Maturity Date – Enter maturity date of loan.
7.Borrower 1 Name and Address/Borrower 2 Name and Address – Name and address of each
borrower.
Truth in Lending Disclosure Section
The Truth in Lending Act requires certain disclosures be segregated from other information on a
closed-end lending document per Regulation Z, Section 1026.17(a). The area labeled “Truth in
Lending Disclosure” is referred to as the “Fed Box.” The Truth in Lending Disclosure contains the
following items:
8.Annual Percentage Rate – Your credit union completes the APR for the loan requested,
Regulation Z, Sections 1026.18(e) and 1026.22.
Note: The APR will be the simple interest rate when the only finance charge is interest. If finance
charges other than interest are to be included, the APR will be different than the simple interest
rate and must be calculated using a calculation device sufficiently sophisticated to correctly
compute the correct APR. Examples of finance charges on consumer loans include:
a) credit report fees
b) loan processing fees
c) mandatory residual value insurance (RVI)
d) mandatory GAP coverage
9. F
inance Charge – Your credit union completes the total finance charge for the loan as required
by Regulation Z, Section 1026.18(d).
Note: Any prepaid finance charge should be included in this amount. Do not put an ‘e’ for
estimate in this box. The Disclosure should be completed with the total finance charge known at
the time of disclosure.
Closed-End Consumer Lending User Guide
51
Page 1 instructions (continued)
10.Amount Financed – Regulation Z, Section 1026.18(b) requires that the amount financed be
calculated in the following way:
a) Start with the principal loan amount.
b)Add other amounts that are financed by the lender and are not part of the finance charge.
Level rate and monthly renewable credit insurance is not financed; therefore, the cost for
this insurance should not be included in the “Amount Financed” section. Single premium
insurance is financed and will be included in this amount.
c) Subtract any prepaid finance charge.
11.Total of Payments – The sum of the payments for the loan, Regulation Z, Section 1026.18(h).
The total payments will be based on the contractual payment shown in paragraph one of the
Note.
12.Total Sales Price – Regulation Z, Section 1026.18(j) requires this disclosure be used whenever
your credit union is both the seller and the creditor. This is most likely to happen when you are
selling a repossessed vehicle. In this section you must disclose both the total sale price and the
downpayment amount, if any.
The total sale price is the sum of the:
a) cash price
b) amounts that are financed but not finance charges
c) finance charge
13.Prepayment – Regulation Z, Section 1026.18(k) requires disclosure of any prepayment penalty.
The language in the LOANLINER documents prohibits a prepayment penalty.
14. Required Deposit – Per Regulation Z, Section 1026.18(r) and footnote 45, this language is
required when the borrower must maintain a deposit as a condition of the loan.
15.Property Insurance – If your credit union sells property insurance, enter the amount of the
insurance premium. The term of the insurance must also be disclosed if it is less than the term of
the loan, Regulation Z, Section 1026.18(n).
16.Assumption – Since most credit unions do not allow loans to be assumed, this statement
informs the borrowers that the loan cannot be assumed. Regulation Z, Section 1026.18(q).
17.Interest Rate – Regulation Z, Section 1026.18(s)(2)(i) requires the disclosure of the interest rate
at consummation and the period of time until the first interest rate adjustment may occur. This
checkbox and interest rate is filled in if the interest rate is not based on an index plus margin.
18. Interest Rate – Regulation Z, Section 1026.18(s)(2)(i) requires the disclosure of the interest rate
at consummation and the period of time until the first interest rate adjustment may occur. This
checkbox and interest rate is filled in if the interest rate is based on an index plus margin.
19. Interest Rate – Regulation Z, Section 1026.18(s)(2)(i) requires the disclosure of the maximum
interest rate that may apply during the first five years after consummation and the earliest date on
which the rate may apply.
Closed-End Consumer Lending User Guide
52
Page 1 instructions (continued)
20. Interest Rate – Regulation Z, Section 1026.18(s)(2)(i) states that the credit union must provide
the maximum interest rate that may apply during the life of the loan and indicate the earliest date
the rate applies.
21,22 & 23. Principal + Interest Payment – Section 1026.18(s)(3)(i) states that if all periodic
payments are applied to accrued interest and principal, then the corresponding periodic principal
and interest payment is to be disclosed.
24.Estimated Taxes + Insurance (Escrow) (Includes Private Mortgage Insurance) – Regulation
Z, Section 1026.18(s)(3)(i) states that if an escrow account is required, an estimate of the
amount of taxes and insurance, including any mortgage insurance, is to be provided.
25,26 & 27. Total Estimate Monthly Payment – Regulation Z, Section 1026.18(s)(3)(i) comes
from the sum of the amounts disclosed in each column. This figure cannot include any credit
insurance or debt protection amounts.
28.Introductory Rate – Regulation Z, Section 1026.18(s)(2)(iii) states that if the interest rate at
consummation is less than the fully indexed rate, the discounted rate and time period along
with the increased rate and when the rate will increase needs to be provided below the interest
rate and payment summary table. Only enter information in this section if the interest rate is not
based on an index plus margin.
29.Balloon Payment – Regulation Z, Section 1026.18(s)(5)(i) states that if the transaction requires
a balloon payment, the due date and balloon payment amount need to be disclosed below the
interest rate and payment summary table.
30. Filing Fees – If you pass on the cost of filing fees (for example, a lien filing fee) to borrowers,
whether directly or indirectly, you must disclose the cost — even if the borrower pays the fee in
cash to the credit union or a third party. This fee is not a finance charge if you only pass on the
actual cost charged by government officials, Regulation Z, Section 1026.18(o).
31. Non-Filing Insurance – Enter the dollar amount of the non-filing insurance. This insurance
premium is used to perfect the lien in lieu of actually filing the security interest, Regulation Z,
Section 1026.18(o).
32.Late Charge – The late charge is any dollar or percentage charge that may be imposed before
maturity due to a late payment. This language is provided by the credit union and may be printed
on the documents, Regulation Z, Section 1026.18(l).
33. Security – The statement “Collateral securing other loans with the credit union may also
secure this loan” is printed to disclose the existence of a cross-collateral clause in the Security
Agreement. The statement “You are giving a security interest in your shares and dividends and,
if any, your deposits and interest in the credit union; and the property described below:” discloses
that shares/deposits are also offered to secure the loan. The description of the collateral must
be included here since this portion of the Truth in Lending Disclosure also is part of the Security
Agreement. A complete description of collateral should be shown. Also, additional security
offered should be disclosed in the “other” field. For the “Pledge of Shares” box, enter the amount
and account number for share secured loans.
34.Contract Reference – This is a statement per Regulation Z, Section 1026.18(p) that the
consumer should refer to the appropriate contract documents for information about nonpayment,
default and prepayment penalties, and rebates.
Closed-End Consumer Lending User Guide
53
Page 2 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$
35
Amount Given to You Directly
$
36
Amount Paid on Your Account
$
37
Prepaid Finance Charge
$
38
Amounts Paid to Others on Your Behalf: (If an amount is marked with an asterisk (*) we will be retaining a portion of the amount.)
$
$
$
$
$
$
$
To
To
To
To
To
To
To
$
$
$
$
$
$
$
39
To
To
To
To
To
To
To
LOAN AGREEMENT
In this Loan Agreement ("Agreement") all references to "Credit Union," "we," "our," or "us," mean the Credit Union whose name
appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you" or "your" mean each
person who signs, or otherwise authenticates, this Agreement as a borrower.
40 1. PROMISE TO PAY - You promise to pay $
to the Credit Union plus interest on the unpaid balance until what you owe
has been paid. You will pay principal and interest by making payments each month. Your initial monthly payment will be in the amount
of U.S. $
. This amount may change if the interest rate changes. You will receive notice of interest rate and payment
changes as required by law. You will make payments on the
day of each month beginning on
. You will make these
payments every month until you have paid all of the principal and interest and any other charges, described below, that you may owe
under this Note. If, on
, you still owe amounts under this Note you will pay all amounts in full on that date.
The initial interest rate is
% per year and will vary as follows:
41 Collection Costs:
42
2. PAYMENTS - The Promise to Pay section tells you how
an interest rate change will affect your payment. If you
elect voluntary payment protection, we will include the
premium or program fee in your payments. If you
subsequently elect voluntary payment protection, we will
either include the premium or program fee in your payments
or extend the term of your loan. If the term is extended,
you will be required to make additional payments of the
scheduled amount, until what you owe has been paid. You
may prepay any amount without penalty. If you prepay any
part of what you owe, you are still required to make the
regularly schedule payments, unless we have agreed to a
change in the payment due date. Because this is a simple
interest loan, if you do not make payments exactly on the
due date, your final payment may be more or less than the
amount of the final payment that is disclosed. You promise
to make all payments to the place we choose. If this loan
refinances another loan we have with you, the other loan
will be canceled and refinanced as of the date of this loan.
Unless otherwise required by law, payments will be applied
to amounts owed in the manner we choose.
43 3. LOAN PROCEEDS BY MAIL - If the proceeds of this loan
are mailed to you, interest on this loan begins on the date
the loan proceeds are mailed to you.
44 4. SECURITY FOR LOAN - This Agreement is secured by all
property described in the "Security" section of the Truth in
Lending Disclosure. Property securing other loans you have
with us also secures this loan, unless the property is a
dwelling. In addition to your pledge of shares, we may also
have what is known as a statutory lien on all individual and
joint accounts you have with us. A statutory lien means we
have the right under federal law and many state laws to
claim an interest in your accounts. We can enforce a
statutory lien against your shares and dividends, and if any,
interest and deposits, in all individual and joint accounts you
have with us to satisfy any outstanding financial obligation
that is due and payable to us. We may exercise our right
to enforce this lien without further notice to you, to the
extent permitted by law. For all borrowers: You pledge as
security for this loan all shares and dividends and, if any, all
deposits and interest in all joint and individual accounts you
have with the Credit Union now and in the future. The
statutory lien and/or your pledge will allow us to apply the
funds in your account(s) to what you owe when you are in
default. The statutory lien and your pledge do not apply to
any Individual Retirement Account or any other account that
would lose special tax treatment under state or federal law
if given as security.
5. DEFAULT - You will be in default under this Agreement if 45
you do not make a payment of the amount required on or
before the date it is due. You will be in default if you break
any promise you made in connection with this loan or if
anyone is in default under any security agreement made in
connection with this Agreement. You will be in default if
you die, file for bankruptcy, become insolvent (that is,
unable to pay your bills and loans as they become due), or
if you made any false or misleading statements in your loan
application. You will also be in default if something happens
that we believe may seriously affect your ability to repay
what you owe under this Agreement or if you are in default
under any other loan agreement you have with us.
6. ACTIONS AFTER DEFAULT - When you are in default, 46
we may demand immediate payment of the entire unpaid
balance under this Agreement. You waive any right you
have to receive demand for payment, notice of intent to
demand immediate payment and notice of demand for
immediate payment. If we demand immediate payment, you
will continue to pay interest at the rate provided for in this
Agreement, until what you owe has been repaid. We will
also apply against what you owe any shares and/or deposits
given as security under this Agreement. We may also
exercise any other rights given by law when you are in
default.
NXX061-e
Closed-End Consumer Lending User Guide
54
Page 2 instructions
Itemization of Amount Financed Section
35. Itemization of Amount Financed – Enter amount the borrower financed per Regulation Z,
Section 1026.18(c). This is the amount shown in the “Amount Financed” box.
36.Amount Given to You Directly – Enter the amount of money given to the borrower in the form
of cash or a check, as well as funds placed in an asset account. (Asset accounts include, but are
not limited to, share accounts, share draft accounts, etc.)
Note: If a check is made out to the borrower and another party, this amount is to be included in
this box. You don’t have to show the other party in the section “Amounts Paid to Others on your
Behalf,” Regulation Z, Official Staff Interpretation, paragraph 18(c)(1)(i) - 1. Amounts paid to
Consumer.
37.Amount Paid on Your Account – This is the amount your credit union will use to pay off
an existing loan balance. This section would include a payment of an existing loan balance
(principal and accrued interest) on a prior loan. Only amounts paid to loan accounts should be
shown here, Regulation Z, Section 1026.18(c)(1)(ii).
38.Prepaid Finance Charge – Prepaid finance charges include any portion of the finance charge
paid prior to or at closing or settlement. They may be paid in cash or financed and withheld
from the proceeds. Some common examples include: service fees, loan fees, loan guarantee
insurance, credit report fees, residual value insurance and mandatory GAP coverage. Prepaid
finance charges are subtracted from the amount financed and added to the finance charge for
disclosure purposes. This will result in an APR that is different than the contractual interest rate.
39.Amount Paid to Others on Your Behalf – These boxes are provided to disclose amounts
paid to other persons by the credit union on the borrower’s behalf. These persons must be
identified by name except that payments to government agencies, public officials, credit report
agencies, appraisers and insurance companies may be generically identified with phrases like
“credit bureau” or “state agency.” If loan checks are made payable to a third party only, and not
the borrower, the amount of the payment and the name of the third party must be disclosed,
Regulation Z, Section 1026.18(c)(1)(iii).
Note: The level rate or monthly renewable credit disability/credit life costs and amounts need not
be disclosed in this section.
This section includes a sentence which reads as follows: If an amount is marked with an
asterisk(*), we will be retaining a portion of the amount. An asterisk should be used whenever
the borrower is financing a product for which the credit union imposes an “upcharge.” Typically,
if the credit union sells mechanical repair coverage (MRC) or extended warranties and retains
a portion of the amount, then an asterisk will be needed. An example would be if the borrower
purchased an extended warranty from the credit union. The warranty may cost the credit union
$300.00, but the credit union charges the borrower $400.00. The $100.00 difference is an
“upcharge” on this product. The credit union needs to disclose that it is retaining a portion of the
$400.00 that is being charged to the borrower.
Closed-End Consumer Lending User Guide
55
Page 2 instructions (continued)
Loan Agreement Section
40.Promise to Pay – This is the contractual promise to repay the principal loan amount plus
interest. Your credit union should put the initial interest rate as well as the principal amount
borrowed. Also include the variable rate contract language.
ariable Rate – The definition of a variable rate loan for closed-end credit is any loan that
V
can increase after consummation in a transaction not secured by the consumer’s principal
dwelling. The Loan and Security Agreement was designed to handle all types of credit secured
by personal property. There are many types of variable rate closed-end transactions and they
generally fall into one of the following categories:
a)Changes that follow an external index such as the Prime Rate, Treasury Bill Rates, Eleventh
District Cost of Funds, Treasury Securities, etc. These are indexes that are set up by some
agency or group other than the credit union and are generally published in The Wall Street
Journal, the financial pages of many local newspapers and the Federal Reserve Statistical
Release and Federal Reserve Board Bulletin.
b)Changes that follow an external index that are beyond the control of the credit union such
as the rate charged by another local financial institution; e.g., the fixed rate charged by XYZ
Financial for 30-year fixed rate mortgages. These rates generally are not officially published
like the indices described in (a.) above, but they are beyond the control of the credit union.
c)Changes that follow an internal index of the credit union. An example would be the credit
union’s rate on 6-month certificates or the dividend rate paid on share accounts.
d)Changes in the rate that are based entirely on the discretion of the credit union’s board of
directors. At any particular time the board of directors can decide that the interest rate will
change on existing loans.
e)Changes that are tied to some event or occurrence. Common occurrences in credit union
loans which trigger an interest rate increase include: (a) when an employee leaves the
employment of the credit union, (b) discontinuing payroll deduction or automatic payment,
(c) failure to maintain minimum account balances or (d) failure to maintain certain services.
f)A renewable balloon payment when (1) the credit union is unconditionally obligated to
renew the balloon payment loan at the consumer’s option or subject to conditions within the
consumer’s control and (2) the credit union has the option of increasing the interest rate at
the time of renewal of the balloon.
Closed-End Consumer Lending User Guide
56
Page 2 instructions (continued)
REQUIRED DISCLOSURES FOR VARIABLE RATE LOANS
The following disclosures must appear in this section of the document:
• The Circumstances Under Which the Rate May Increase
SAMPLE LANGUAGE:
The APR may increase during the term of this transaction if:
[the prime interest rate of (creditor) increases.]
[the balance in your deposit account falls below $__________.]
[you terminate your employment with (employer).]
• Any Limitation on the Increase
SAMPLE LANGUAGE:
[The interest rate will not increase above ______%.]
[The maximum interest rate increase at one time will be _____%.]
[The rate will not increase more than once every (time period).]
•The Effect of an Increase
SAMPLE LANGUAGE:
Any increase will take the form of:
[higher payment amounts.]
[more payments of the same amount.]
[a larger amount due at maturity.]
•An Example of the Payment Terms that would Result from an Increase
The example must be either a standard example that illustrates the terms and conditions of
the type of credit offered by the credit union or it may directly reflect the terms and conditions
of the particular transaction.
In addition to the Truth in Lending Disclosures, you must also explain any other terms of
the variable rate which are directly related. These include: the margin, interest rate floors,
rounding of index values or payments.
41.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are to be disclosed. This language may be imprinted.
42.Payments – This is the borrower’s promise to make payments as specified in the Truth in
Lending Disclosure. This paragraph also discloses to the borrower that there is no prepayment
penalty and if payments are not made as scheduled, the final payment may be more or less
than the final payment that was disclosed. Also, if voluntary payment protection is elected, the
premium or program fees may be included in the payment or the loan term will be extended. If
you are using a fixed/variable note, this section would also contain information on the variable
rate.
Closed-End Consumer Lending User Guide
57
Page 2 instructions (continued)
43.Loan Proceeds By Mail – This is an explanation that interest begins on the date the loan
proceeds are mailed, if this loan is transacted through the mail.
44.Security For Loan – Regulation Z, Section 1026.18(m) requires that the creditor disclose the
fact that it will acquire a security interest in the property purchased or in other property identified
by item or type. The LOANLINER Loan Agreement discloses that the loan is secured by all items
described in the “Security” section of the Truth in Lending Disclosure.
The loan also is secured by property securing other loans with the credit union.
Much of this section deals with a statutory lien. A statutory lien is applicable to federal and
many state-chartered credit unions. In 1999, NCUA issued regulations that required federal
credit unions to disclose statutory liens in a certain manner. If a borrower’s loan is in default,
the statutory lien allows your credit union to apply the balance of shares and dividends in all
individual and joint accounts with your credit union to satisfy the obligation.
There is also a general pledge of shares in this section, which allows your credit union to apply
the funds in your borrower’s account(s) to what they owe when they are in default. This pledge
is considered additional security for all loans. The pledge does not apply to IRAs or any other
account that would lose special tax treatment under state or federal law if given as security. As
long as your borrower is making payments and the loan is not share secured, your borrower has
access to his/her shares and/or deposits.
ote: For state-chartered credit unions located in states where statutory liens are not allowed,
N
the general pledge of shares would apply.
45.Default – This paragraph describes the elements of default and allows your credit union to
accelerate the unpaid balance in the event of default. The default language will vary by version
due to state law requirements. Be sure to read this paragraph before deciding whether you can
call a loan in default. If you have questions, consult your legal counsel.
46.Actions After Default – This section includes a statement allowing the credit union to accelerate
the unpaid balance in the event of default. If this paragraph gives the borrower a right to cure
the default, be sure you comply with the applicable state law on timing and content of the Right
to Cure Notice. When a debt is accelerated, interest will continue on the unpaid balance at
the same rate. Lastly, your credit union may exercise any other rights given by law when your
borrower is in default.
Closed-End Consumer Lending User Guide
58
To create these samples, pull the pdf into an InDesign file and add the circles to a seperate layer. Now make a high res pdf of
the form with circle numbers to use as a graphic for the manual. (maz)
Page 3 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
LOAN AGREEMENT (continued)
7. EACH PERSON RESPONSIBLE - Each person who signs,
or otherwise authenticates, this Agreement will be
individually and jointly responsible for paying the entire
amount owed under this Agreement. This means we can
enforce our rights against any one of you individually or
against all of you together.
48 8. LATE CHARGE - If you are late in making a payment,
you promise to pay the late charge shown in the Truth in
Lending Disclosure. If no late charge is shown, you will not
be charged one.
49 9. DELAY IN ENFORCING RIGHTS - We can delay enforcing
any of our rights under this Agreement any number of times
without losing the ability to exercise our rights later. We
can enforce this Agreement against your heirs or legal
representatives.
50 10. CONTINUED EFFECTIVENESS - If any part of this
Agreement is determined by a court to be unenforceable,
the rest will remain in effect.
47
11. NOTICES - Notices will be sent to you at the most recent
address you have given us in writing. Notice to any one of
you will be notice to all.
12. USE OF ACCOUNT - You promise to use your account
for consumer (personal, family or household) purposes,
unless the Credit Union gives you written permission to use
the account also for agricultural or commercial purposes, or
to purchase real estate.
13. NO ORAL AGREEMENTS -- THIS NOTE CONSTITUTES
A "WRITTEN LOAN AGREEMENT" PURSUANT TO
SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE, IF SUCH SECTION APPLIES. THIS
WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
14. OTHER PROVISIONS -
51
52
53
54
55
SIGNATURES
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is
described in the "Security" section of the Truth in Lending Disclosure, you also agree to the terms of the Security
Agreement. If you sign, or otherwise authenticate, as "Owner of Property" you agree only to the terms of the Security
Agreement.
CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
Borrower 1 Signature
Borrower 2 Signature
Date
X
Date
X
(Seal)
(Seal)
56
Signature
Date
X
Other Borrower
(Seal)
Owner of Property
Witness
Signature
Date
X
Other Borrower
(Seal)
Owner of Property
Witness
NXX061-e
Closed-End Consumer Lending User Guide
59
Page 3 instructions
47.Each Person Responsible – This paragraph explains that each person who signs, or otherwise
authenticates the Loan Agreement will be held individually and jointly responsible for paying the
entire amount owed under the Agreement.
48. Late Charge – This paragraph explains that if your borrower is late in making a payment, they
promise to pay the late charge shown in the Truth in Lending Disclosure, if one is disclosed.
49.Delay in Enforcing Rights – This statement provides that your credit union can delay enforcing
any rights under this Agreement without losing the ability to exercise those rights later.
50.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, that the remainder of the Agreement remains in effect.
51.Notices – This paragraph states that your credit union will send notices to the most recent
address your borrower gave your credit union in writing and that notice to one is notice to all.
52.Use of Account – This paragraph was added to the Loan Agreement due to the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) which gave the credit union
protection against court-ordered reduction (cramdown) of a secured balance due on purchasemoney secured debt acquired for personal, family or household purposes. This provision will
prove a vehicle was purchased for personal use.
53. No Oral Agreements – This paragraph applies to Texas transactions and confirms that the rights
and obligations of the borrower and lender shall be determined solely from the written Loan
Agreements and any prior oral agreements between the lender and borrower are superseded by
the Loan Agreement.
54.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Signatures Section
55.Signature Section – This area contains signature language that will vary on some documents
due to state law variations.
56.Borrower’s Signature – The borrower signs, or otherwise authenticates the Loan and Security
Agreements and Disclosure Statement in this area. Additional signatures may be obtained using
these areas. By signing, or otherwise authenticating as a borrower, a person is agreeing to the
Loan and Security Agreements. If the owner of the property is not a borrower, the box “Owner of
Property” should be checked. (This is the ONLY situation when this box should be checked.) The
owner of property is agreeing only to the terms of the Security Agreement. A witness may also
sign here. A witness signature is not required under the Truth in Lending Act.
Closed-End Consumer Lending User Guide
60
To create these samples, pull the pdf into an InDesign file and add the circles to a seperate layer. Now make a high res pdf of
the form with circle numbers to use as a graphic for the manual. (maz)
Page 4 sample
Credit Union
Borrower(s)
Loan No.
Acct. No.
SECURITY AGREEMENT
57
58
59
60
61
62
In this Agreement all references to "Credit Union," "we," "our" or
"us" mean the Credit Union whose name appears on this document
and anyone to whom the Credit Union assigns or transfers this
Agreement. All references to the "Loan" mean the loan described in
the Loan Agreement that is part of this document. All references to
"you" or "your" mean any person who signs, or otherwise
authenticates, this Agreement.
1. THE SECURITY FOR THE LOAN - You give us what is known as a
security interest in the property described in the "Security" section
of the Truth in Lending Disclosure that is part of this document ("the
Property"). The security interest you give includes all accessions.
Accessions are things which are attached to or installed in the
Property now or in the future. The security interest also includes any
replacements for the Property which you buy within 10 days of the
Loan and any extensions, renewals or refinancings of the Loan. It
also includes any money you receive from selling the Property or
from insurance you have on the Property. If the value of the
Property declines, you promise to give us more property as security
if asked to do so.
2. WHAT THE SECURITY INTEREST COVERS/CROSS COLLATERAL
PROVISIONS - The security interest secures the Loan and any
extensions, renewals or refinancings of the Loan. If the Property is
not a dwelling, the security interest also secures any other loans,
including any credit card loan, you have now or receive in the future
from us and any other amounts you owe us for any reason now or in
the future, except any loan secured by your principal residence. If
the Property is household goods as defined by the Federal Trade
Commission Credit Practices Rule or your principal residence, the
Property will secure only this Loan and not other loans or amounts
you owe us.
3. OWNERSHIP OF THE PROPERTY - You promise that you own the
Property or, if this Loan is to buy the Property, you promise you will
use the Loan proceeds for that purpose. You promise that no one
else has any interest in or claim against the Property that you have
not already told us about. You promise not to sell or lease the
Property or to use it as security for a loan with another creditor until
the Loan is repaid. You promise you will allow no other security
interest or lien to attach to the Property either by your actions or by
operation of law.
4. PROTECTING THE SECURITY INTEREST - If your state issues a
title for the Property, you promise to have our security interest
shown on the title. We may have to file what is called a financing
statement to protect our security interest from the claims of others.
You irrevocably authorize us to execute (on your behalf), if
applicable, and file one or more financing, continuation or
amendment statements pursuant to the Uniform Commercial Code
(UCC) in a form satisfactory to us. You promise to do whatever
else we think is necessary to protect our security interest in the
Property. You also promise to pay all costs, including but not limited
to any attorney fees, we incur in protecting our security interest and
rights in the Property, to the extent permitted by applicable law.
5. USE OF PROPERTY - Until the Loan has been paid off, you
promise you will: (1) Use the Property carefully and keep it in good
repair. (2) Obtain our written permission before making major
changes to the Property or changing the address where the Property
is kept. (3) Inform us in writing before changing your address. (4)
Allow us to inspect the Property. (5) Promptly notify us if the
Property is damaged, stolen or abused. (6) Not use the Property for
any unlawful purpose. (7) Not retitle Property in another state
without telling us.
6. PROPERTY INSURANCE, TAXES AND FEES - You promise to pay
all taxes and fees (like registration fees) due on the Property and to
keep the Property insured against loss and damage. The amount and
coverage of the property insurance must be acceptable to us. You
may provide the property insurance through a policy you already
have, or through a policy you get and pay for. You promise to make
the insurance policy payable to us and to deliver the policy or proof
of coverage to us if asked to do so.
If you cancel your insurance and get a refund, we have a right to the
refund. If the Property is lost or damaged, we can use the insurance
settlement to repair the Property or apply it towards what you owe.
You authorize us to endorse any draft or check which may be
payable to you in order for us to collect any refund or benefits due
under your insurance policy.
If you do not pay the taxes or fees on the Property when due or
keep it insured, we may pay these obligations, but we are not
required to do so. Any money we spend for taxes, fees or insurance
will be added to the unpaid balance of the Loan and you will pay
interest on those amounts at the same rate you agreed to pay on
the Loan. We may receive payments in connection with the
insurance from a company which provides the insurance. We may
monitor our loans for the purpose of determining whether you and
other borrowers have complied with the insurance requirements of
our loan agreements or may engage others to do so. The insurance
charge added to the Loan may include (1) the insurance company's
payments to us and (2) the cost of determining compliance with the
insurance requirements. If we add amounts for taxes, fees or
insurance to the unpaid balance of the Loan, we may increase your
payments to pay the amount added within the term of the
insurance or term of the Loan.
7. INSURANCE NOTICE - If you do not purchase the required
property insurance, the insurance we may purchase and charge you
for will cover only our interest in the Property. The premium for
this insurance may be higher because the insurance company may
have given us the right to purchase insurance after uninsured
collateral is lost or damaged. The insurance will not be liability
insurance and will not satisfy any state financial responsibility or no
fault laws.
8. DEFAULT - You will be in default if you break any promise you
make or fail to perform any obligation you have under this
Agreement. You will also be in default under this Agreement if the
Loan is in default. You will be in default if any property you have
given us as security is repossessed by someone else, seized under
a forfeiture or similar law, or if anything else happens that
significantly affects the value of the property or our security
interest in it.
9. WHAT HAPPENS IF YOU ARE IN DEFAULT - When you are in
default, we may demand immediate payment of the outstanding
balance of the Loan without giving you advance notice and take
possession of the Property. You agree the Credit Union has the
right to take possession of the Property without judicial process if
this can be done without breach of the peace. If we ask, you
promise to deliver the Property at a time and place we choose. If
the property is a motor vehicle or boat, you agree that we may
obtain a key or other device necessary to unlock and operate it,
when you are in default. We will not be responsible for any other
property not covered by this Agreement that you leave inside the
Property or that is attached to the Property. We will try to return
that property to you or make it available for you to claim.
After we have possession of the Property, we can sell it and apply
the money to any amounts you owe us. We will give you notice of
any public disposition or the date after which a private disposition
will be held. Our expenses for taking possession of and selling the
Property will be deducted from the money received from the sale.
Those costs may include the cost of storing the Property, preparing
it for sale and attorney's fees to the extent permitted under state
law or awarded under the Bankruptcy Code.
If you have agreed to pay the Loan, you must pay any amount that
remains unpaid after the sale money has been applied to the unpaid
balance of the Loan and to what you owe under this Agreement.
You agree to pay interest on that amount at the same rate as the
Loan until that amount has been paid.
10. DELAY IN ENFORCING RIGHTS AND CHANGES IN THE LOAN We can delay enforcing any of our rights under this Agreement any
number of times without losing the ability to exercise our rights
later. We can enforce this Agreement against your heirs or legal
representatives. If we change the terms of the Loan, you agree that
this Agreement will remain in effect.
11. CONTINUED EFFECTIVENESS - If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in
effect.
12. NOTICE TO NORTH DAKOTA BORROWERS PURCHASING A
MOTOR VEHICLE - THE MOTOR VEHICLE IN THIS TRANSACTION
MAY BE SUBJECT TO REPOSSESSION. IF IT IS REPOSSESSED
AND SOLD TO SOMEONE ELSE, AND ALL AMOUNTS DUE TO THE
SECURED PARTY ARE NOT RECEIVED IN THAT SALE, YOU MAY
HAVE TO PAY THE DIFFERENCE.
13. NOTICE FOR ARIZONA OWNERS OF PROPERTY - It is unlawful
for you to fail to return a motor vehicle that is subject to a security
interest, within thirty days after you have received notice of
default. The notice will be mailed to the address you gave us. It is
your responsibility to notify us if your address changes. The
maximum penalty for unlawful failure to return a motor vehicle is
one year in prison and/or a fine of $150,000.00.
The following notice applies ONLY when the box at left is marked.
63
64
65
66
67
68
69
14. NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT 70
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES
WHICH THE DEBTOR COULD ASSERT AGAINST THE
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT
HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY
HEREUNDER BY THE DEBTOR SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR HEREUNDER.
71
15. OTHER PROVISIONS -
NXX061-e
Closed-End Consumer Lending User Guide
61
Page 4 instructions
Security Agreement Section
57.The Security For the Loan – This paragraph grants your credit union a security interest in
the property described in the “Security” section of the Truth in Lending Disclosure. It is very
important that you thoroughly describe the collateral in the Truth in Lending Disclosure. It also
permits your credit union a security interest in accessions, proceeds of the collateral and allows
you to obtain additional collateral if the market value of the collateral declines.
58.What the Security Interest Covers – This paragraph states that the property described in the
Truth in Lending Disclosure secures this loan. If the property is not a dwelling, then the security
for the loan will also be security for other debts with the credit union, now and in the future. This
is known as a “cross-collateral” clause. However, if the property is household goods as defined
by Federal Trade Commission Credit Practices Rule, the property can only secure this loan and
not other loans or amounts owed to the credit union.
59. Ownership of the Property – This paragraph describes the borrower’s ownership rights. This
clause explains that a borrower can be considered in default if they sign the Security Agreement
and they do not own the collateral shown in the “Security” section of the Truth in Lending
Disclosure. It outlines that the borrower cannot sell the collateral or give anyone else a security
interest in it until the debt has been paid, nor can they allow any other security interest or lien to
be attached to the property.
60.Protecting the Security Interest – This paragraph requires the borrower to promise to assist
the credit union in any way to protect the security interest. It also requires the borrower to
identify your credit union as lien holder on the title and requires the borrower to sign a financing
statement, if necessary.
61.Use of Property – This paragraph outlines the responsibilities of the borrower to maintain the
collateral.
62.Property Insurance, Taxes and Fees – This paragraph contains information about taxes, fees
and property insurance on the collateral. The borrower is required to pay all taxes and fees
plus insure the property and name the credit union as loss payee on an insurance policy. Any
amounts spent by your credit union on taxes, fees or property insurance can be added to the
loan balance and be subject to interest at the same rate as the original loan. Your credit union
has the option of increasing the borrower’s payment to the extent necessary to repay the loan in
the original scheduled term or extend the term of the loan to repay these amounts.
63.Insurance Notice – This paragraph states that if your borrower does not purchase property
insurance, your credit union can purchase and charge your borrower for insurance that covers
only your credit union’s interest in the property.
64.Default – Article 9 of the Uniform Commercial Code (UCC) does not define default, so the
contract must define this term. Default is defined as breaking any promise or failing to perform
any obligation under this Security Agreement or the LOANLINER Loan and Security Agreements
and Disclosure Statement.
Closed-End Consumer Lending User Guide
62
Page 4 instructions (continued)
65. What Happens if you are in Default – This paragraph describes your credit union’s rights if the
property is in default. It gives your credit union the right to accelerate the debt and repossess the
collateral upon default. It establishes the right to sell the repossessed property and to pass any
costs involved onto your borrowers. Lastly, it requires your borrower to pay any remaining loan
balance after the sale money has been applied. If you are required to give the borrower a right to
cure the default, be sure to follow state law requirements on the timing and content of the notice.
66.Delay in Enforcing Rights and Changes in the Loan – This statement provides that your
credit union can delay enforcing any rights under this Agreement without losing the ability to
exercise those rights later.
67.Continued Effectiveness – This statement deems that if a court finds any part of the Agreement
unenforceable, the remainder of the Agreement is still in effect.
68.Notice to North Dakota Borrowers Purchasing a Motor Vehicle – This paragraph states that
a motor vehicle may be subject to repossession for North Dakota borrowers. This notice will only
appear on the document used for North Dakota borrowers.
69.Notice for Arizona Owners of Property – This paragraph describes responsibilities for Arizona
owners of property when in default on a motor vehicle. This notice will only appear on the
document used for Arizona borrowers.
70.Consumers’ Claims and Defenses Notice – Whenever your credit union is selling a
repossessed vehicle and financing it, the checkbox for the “Consumers’ Claims and Defenses
Notice” should be checked. The Consumers’ Claims and Defenses Notice may also be required
in other situation where the credit union has a business relationship with the seller of goods.
71.Other Provisions – This section allows your credit union some flexibility by adding special
provisions such as governing law, demand feature language, lease-like language, or option
agreements.
Closed-End Consumer Lending User Guide
63
Chapter 6:
Variable Rate Sample Language
Variable Rate Sample 1
1.Index or Change Occurrence: Prime Rate Published in The Wall Street Journal
2.Margin: 1.50%
3.Rounding: N/A
4.Frequency of Rate Change: Monthly on the first day of the month
5.Interest Rate Ceiling / Maximum: N/A
6.Interest Rate Floor / Minimum: 4.00%
7.Periodic Cap: N/A
8.Effect of Increase: More payments of the same amount
“ Fed Box” Disclosure: The APR may increase during the term of this transaction if the Prime
Rate published in The Wall Street Journal (Index) changes. We will add a margin of 1.50% to the
Index Value. The rate will change monthly on the first day of the month. The rate will never be
higher than the maximum rate allowed by law, and it will never be less than 4.00%. Any interest
rate increases result in more payments of the same amount. If your loan were for $__________
at __________% for (term), and the rate increased to __________% after (time period), you will
have to make _________ additional payments.
ote Disclosure: The interest rate is subject to change as follows: the Prime Rate published
N
in The Wall Street Journal (Index) changes. We will add a margin of 1.50% to the index value.
The rate will change monthly on the first day of the month. The rate will never be higher than the
maximum rate allowed by law, and it will never be less than 4.00%. Any interest rate increases
will result in more payments of the same amount.
9. Placement of variable rate contract language on documents:
aper Documents – You must include the variable rate “Fed Box” disclosure in the “Variable
P
Rate” section of the Truth in Lending Disclosure.
lectronic Documents – You must include the variable rate “Fed Box” disclosure in the
E
“Variable Rate” section of the Truth in Lending Disclosure. Plus, in the “Promise to Pay” section
of the Loan Agreement, you must include the Note Disclosure.
Closed-End Consumer Lending User Guide
64
Variable Rate Sample 2
1.Index or Change Occurrence: 3 Month Treasury Bill
2.Margin: 2.50%
3.Rounding: Up to the next 0.50%
4.Frequency of Rate Change: Annually on September 1
5.Interest Rate Ceiling / Maximum: 18.00%
6.Interest Rate Floor / Minimum: 6.00% below the initial rate
7.Periodic Cap: 2.00%
8.Effect of Increase: Larger amount due at maturity
“ Fed Box” Disclosure: The APR may increase during the term of this transaction if the 3 Month
Treasury Bill (Index) changes. We will add a margin of 2.50% to the Index Value and then round
up to the next 0.50%. The rate will change annually on September 1 and will not change more
than 2.00% on each change date. The APR will never be higher than 18.00% or the maximum
amount allowed by law, whichever is less. The rate will never be less than 6.00% below the initial
rate. Any interest rate increase will result in a larger amount due at maturity. If your loan were for
$__________ at __________% for (term), and the rate increased to __________% after (time
period), your final payment would be increased to $__________.
Note Disclosure: The interest rate is subject to change as follows: the 3 Month Treasury Bill
(Index) changes. We will add a margin of 2.50% to the Index value and then round up to the next
0.50%. The rate will change annually on September 1 and will not change more than 2.00% on
each change date. The rate will never be higher than 18.00% or the maximum amount allowed
by law, whichever is less. The rate will never be less than 6.00% below the initial rate. Any
interest rate increase will result in a higher final payment due at maturity.
9. Placement of variable rate contract language on documents:
aper Documents – You must include the variable rate “Fed Box” disclosure in the “Variable
P
Rate” section of the Truth in Lending Disclosure.
Electronic Documents – You must include the variable rate “Fed Box” disclosure in the Variable
Rate section of the Truth in Lending Disclosure. Plus, in the “Promise to Pay” section of the Loan
Agreement, you must include the Note Disclosure.
Closed-End Consumer Lending User Guide
65
Variable Rate Sample 3
1.Index or Change Occurrence: Discontinuing Payroll Deduction will result in 1.00% increase
2.Margin: N/A
3.Rounding: N/A
4.Frequency of Rate Change: N/A
5.Interest Rate Ceiling / Maximum: N/A
6.Interest Rate Floor / Minimum: N/A
7.Periodic Cap: N/A
8.Effect of Increase: Higher payment amounts
“ Fed Box” Disclosure: The APR may increase during the term of this transaction if you
discontinue payroll deduction. At that time the rate will increase by 1.00%. The increase in the
interest rate will result in higher payments for the same period of time. If your loan were for
$__________ at __________% for (term), and the rate increased to __________% after (time
period), the payment you would make would be $__________.
ote Disclosure: The interest rate is subject to change as follows: if you discontinue the
N
deduction of your payment from payroll the interest rate will increase by 1.00%. Any increase in
the interest rate will result in higher payments.
9. Placement of variable rate contract language on documents:
Paper Documents – You must include the variable rate “Fed Box” disclosure in the “Variable
Rate” section of the Truth in Lending Disclosure.
lectronic Documents – You must include the variable rate “Fed Box” disclosure in the
E
“Variable Rate” section of the Truth in Lending Disclosure. Plus, in the “Promise to Pay” section
of the Loan Agreement, you must include the Note Disclosure.
Closed-End Consumer Lending User Guide
66
Variable Rate Sample 4
1.Index or Change Occurrence: Credit union’s regular share dividend rate
2.Margin: 3.00%
3.Rounding: Up to the next 0.50%
4.Frequency of Rate Change: Quarterly on the first day of February, May, August and
November
5.Interest Rate Ceiling / Maximum: N/A
6.Interest Rate Floor / Minimum: 6.00%
7.Periodic Cap: N/A
8.Effect of Increase: Larger amount due at maturity
“Fed Box” Disclosure: The APR may increase during the term of this transaction if the credit
union’s regular share dividend rate increases. We will add a margin of 3.00% to the Index
Value and then round up to the next 0.50%. The rate will change quarterly on the first day of
February, May, August and November. The rate will never be less than 6.00%. Any interest rate
increase will result in a larger amount due at maturity. If your loan were for $__________ at
__________% for (term), and the rate increased to __________% after (time period), your final
payment would increase to $__________.
ote Disclosure: The interest rate is subject to change as follows: the APR may increase
N
during the term of this transaction if: the credit union’s regular share dividend rate increases. We
will add a margin of 3.00% to the Index Value and then round up to the next 0.50%. The rate will
change quarterly on the first day of February, May, August and November. The rate will never be
less than 6.00%. Any interest rate increase will result in a larger amount due at maturity.
9. Placement of variable rate contract language on documents:
Paper Documents – You must include the variable rate “Fed Box” disclosure in the “Variable
Rate” section of the Truth in Lending Disclosure.
Electronic Documents – You must include the variable rate “Fed Box” disclosure in the
“Variable Rate” section of the Truth in Lending Disclosure. Plus, in the “Promise to Pay” section
of the Loan Agreement, you must include the Note Disclosure.
Closed-End Consumer Lending User Guide
67
Variable Rate Sample 5
1.Index or Change Occurrence: 90 Day Certificate
2.Margin: 2.00%
3.Rounding: Up to the next 0.25%
4.Frequency of Rate Change: Monthly
5.Interest Rate Ceiling / Maximum: 10.00%
6.Interest Rate Floor / Minimum: 5.00%
7.Periodic Cap: 0.25% per change date
8.Effect of Increase: Larger amount due at maturity
“ Fed Box” Disclosure: The APR may increase during the term of this transaction if the
dividend rate being paid on the credit union’s 90-day Certificate (Index) changes. We will add
a margin of 2.00% to the Index Value and then round up to the next 0.25%. The APR will not
increase more than 0.25% per change date, will never exceed 10.00% and will never decrease
below 5.00%. Any increase in the APR will result in a larger payment due at maturity. example: If
you borrowed $__________ at __________% for (term), and it increased to __________% after
(time period), your payment at maturity would be $__________.
Note Disclosure: The interest rate is subject to change as follows: the interest rate is based on
the dividend rate being paid on the credit union’s 90 Day Certificate of Deposit plus 2.00% and
will be rounded up to the next 0.25%. The interest rate can change monthly. The interest rate
will not change more than 0.25% per month, will never exceed 10.00% and will never decrease
below 5.00%. Any increase in the interest rate will result in a lager payment due at maturity.
9. Placement of variable rate contract language on documents:
Paper Documents – You must include the variable rate “Fed Box” disclosure in the “Variable
Rate” section of the Truth in Lending Disclosure.
lectronic Documents – You must include the variable rate “Fed Box” disclosure in the
E
“Variable Rate” section of the Truth in Lending Disclosure. Plus, in the “Promise to Pay” section
of the Loan Agreement, you must include the Note Disclosure.
Closed-End Consumer Lending User Guide
68
Chapter 7:
Sample Loans
Sample 1 – Refinance Existing Loan
Loan Scenario:
Refinance an existing loan to include new funds for vacation and finance the filing fee. Payment is
monthly. The member’s wife is not liable on the loan, she is only signing as joint owner of collateral.
Details:
On June 1, 2013 John Q. Member requests a loan for $2,700.00 for a vacation and $7,300.00 to
consolidate an old loan balance ($6,644.75 unpaid balance plus $655.25 accrued interest).
He is offering a used 2011 Toyota Camry for security, which both he and his wife, Cathy, own. The
Camry has a value of $16,000.00 with ID No. 21679147-3.
Your credit union requires the borrower to pay a $4.00 filing fee. John wants the $4.00 financed in the
loan.
John has elected both credit disability and credit life insurance on himself. The insurance cost is
added to the loan balance monthly.
Your credit union does not offer property insurance, however, they require John to obtain such
insurance.
The first payment is due July 1, 2013. The interest rate is 7.00%. The loan is to be repaid in three
years.
Closed-End Consumer Lending User Guide
69
Sample 1
SAMPLE 1
X
1
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
2795
Borrower1NameandAddress
460712
Borrower2Name(andaddressifdifferentfromBorrower1)
Cathy Member
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
6
4
$ 10,004.00
Non-Filing Insurance
Filing Fees
$ 4.00
3
7.00 % $ 1,132.43
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$ 11,591.98
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: N/A
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: 10
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
35 11
$322.01
MonthlyBeginning
1
12
$321.63
7/1/2013
6/1/2016
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Auto–Toyota
Camry
Other (Describe):
Pledge of Shares $
Year
14
I.D. Number
Type/Lien Amount
2011 21679147-3 in Account Number
Value
2-door
Key Number
$16,000.00084899
in Account Number
$
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$ 10,004.00
15
a
$ 4.00 e
$ N/A
Amount Paid to Others
on Your Behalf
LOAN AGREEMENT
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
Prepaid Finance Charge
b
c
d
$ 2,700.00
$ 7,300.00
$ N/A
To PublicOfficers
$ N/A
To
IFANAMOUNTISMARKEDWITHANASTERISK(
To
$ N/A
To
*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
continued on reverse side
16 1. Promise to Pay: You promise to pay $
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
10,004.00
18
loans the interest rate is
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
7.00
17
Kansas
in Lending Disclosure. The initial interest rate is
N/A % per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection
Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
19
X John Q. Member
(SEAL)
X Cathy Member
(SEAL)
BORROWER1
OTHERBORROWER
DATE
OWNEROFPROPERTY
YES
NO
OTHERBORROWER
$ 329.55
$ 126.00
$
X
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
X
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
DATE
X
6-1-2013
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
(SEAL)
BORROWER2
DATE
WITNESS
X
6-1-2013
COVERED MEMBER (Please Print)
e
John Q. Member
e
e
John Q. Member
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
JOINTINSURED’SDATEOFBIRTH
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
70
Explanation of Sample 1
1. F
ixed/Variable Rate – In this example, the interest rate is fixed, so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract interest rate are the
same. This is because there are no other components of the finance charge other than simple
interest.
3.Finance Charge – This is the dollar amount of a contract rate of 7.00% on $10,004.00 for 36
months.
4.Amount Financed – This amount will be $10,004.00. It includes $2,700.00 for a vacation,
$7,300.00 to refinance a loan and the $4.00 filing fee. The cost of credit insurance is not included
in the amount financed.
5. T
otal of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance is included in the total of payments. When monthly credit
insurance is included in the payment, the finance charge plus the amount financed will not equal
the total of payments.
6.Filing Fee – In this example, the filing fee is financed in the amount of $4.00. If your credit union
passes the cost of a filing fee onto your borrowers, the amount must be disclosed in this section,
whether paid in cash or financed. A filing fee is not a finance charge.
7. N
on-Filing Insurance – In this example, the credit union does not have non-filing insurance.
If you charge a borrower more for non-filing insurance than it would cost for actually filing, the
additional cost is a finance charge.
8.Variable Rate – This example is for a fixed rate loan. The “Variable Rate” section is not
applicable and should state ”N/A”.
9.Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10.Late Charge – For this example, the late charge is 20% of interest due if seven or more days
late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late charge,
it must be disclosed.
11.Number of Payments – The number of payments required to repay the loan.
12.Amount of Payments – The payments include the cost of both credit disability and single credit
life.
13.When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and last payment.
14.Security – A full description of the collateral should be shown in the “Security” section of the
Truth in Lending Disclosure.
Closed-End Consumer Lending User Guide
71
Explanation of Sample 1 (continued)
15.Itemization of Amount Financed –
a)“Itemization of Amount Financed” is the amount financed figure of $10,004.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $2,700.00
for a vacation.
c)“Amount Paid on Your Account” is $7,300.00, the amount used to pay off the old loan
balance.
d)“Prepaid Finance Charge” is not applicable since there are no additional prepaid finance
charges on this loan and should be marked ”N/A”.
e)“Amount Paid to Others on Your Behalf” is $4.00 for the financed filing fee being paid to public
officials.
16.Promise to Pay – For this example, the loan proceeds of $10,004.00 and the interest rate
of 7.00% are inserted. The interest rate is the same as the APR since the interest is the only
component of the finance charge.
17.Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19.Signature – John Member signs as the borrower and his wife signs as Owner of Collateral; she is
not liable on the loan. If Cathy had been liable on the loan, she would have signed as Borrower 2.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen both credit disability and
single credit life – X’s have been made in the “Yes” box under Credit Disability and Credit Life.
Since the cost of the insurance is an estimate, an (e) is printed on the document in the premium
schedule. Your credit union must obtain the insured’s signature and date of birth.
Closed-End Consumer Lending User Guide
72
Sample 2 – Share Secured Loan
Loan Scenario:
Request for a share secured loan to purchase furniture. Payment is monthly.
Details:
On June 1, 2013 John Q. Member requests a share secured loan for $10,000.00 to purchase
furniture.
He is offering $10,000.00 from a share account to be used as security. The account number is
1234-1.
John has elected both credit disability and single credit life insurance. The insurance cost is added to
the loan balance monthly.
The first payment is due July 1, 2013. The interest rate is 4.00%. The loan is to be repaid in five
years.
Closed-End Consumer Lending User Guide
73
Sample 2
SAMPLE 2
1
X
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
2796
Borrower1NameandAddress
460712
Borrower2Name(andaddressifdifferentfromBorrower1)
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
4
$ 10,000.00
Non-Filing Insurance
6
$ N/A
3
4.00 % $1,074.41
Filing Fees
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$11,831.08
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: N/A
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: 10
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
59 11
$197.19
MonthlyBeginning
1
12
$196.87
7/1/2013
6/1/2018
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Year
I.D. Number
Type/Lien Amount
Value
Key Number
14
Other (Describe):
Pledge of Shares $
in Account Number
$
in Account Number
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$10,000.00
15
Amount Paid to Others
on Your Behalf
a
$
e
$ N/A
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
b
Prepaid Finance Charge
c
d
$ N/A
$
To
IFANAMOUNTISMARKEDWITHANASTERISK(
),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
$ N/A
To N/A
*
$ 10,000.00
To
To N/A
$ N/A
LOAN AGREEMENT continued on reverse side
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
16 1. Promise to Pay: You promise to pay $
10,000.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
18
loans the interest rate is
4.00 % per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
Kansas 17
N/A % per year. 2. These Agreements are governed by the laws of ____________________________________________.
in Lending Disclosure. The initial interest rate is
3. Collection Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X John Q. Member
19
(SEAL)
BORROWER1
DATE
X
X
6-1-2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
X
OTHERBORROWER
DATE
WITNESS
COVERED MEMBER (Please Print)
e John Q. Member
$ 547.35
$ 209.32
$
X
OWNEROFPROPERTY
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
e John Q. Member
e
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
74
Explanation of Sample 2
1.Fixed/Variable Rate – In this example, the interest rate is fixed so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract interest rate are the
same. This is because there are no other components of the finance charge other than simple
interest.
3.Finance Charge – This is the dollar amount of a contract rate of 4.00% on $10,000.00 for 60
months.
4.Amount Financed – This amount will be $10,000.00. The cost of credit insurance is not
included in the amount financed.
5.Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance is included in the total of payments. When monthly credit
insurance is included in the payment, the finance charge plus the amount financed will not equal
the total of payments.
6. Filing Fee – In this example, the filing fee is not applicable for a share secured loan.
7.Non-Filing Insurance – In this example, the non-filing insurance is not applicable for a share
secured loan.
8. Variable Rate – This example is for a fixed rate loan. The “Variable Rate” section is not
applicable and should state ”N/A”.
9. Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10. Late Charge – For this example, the late charge is 20.00% of interest due if seven or more days
late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late charge,
it must be disclosed.
11. Number of Payments – The number of payments required to repay the loan.
12.Amount of Payments – The payments include the cost of both credit disability and single credit
life.
13.When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and the last payment.
14.Security – For this example, the security interest in the shares is shown at the bottom of the
“Security” section of the Truth in Lending Disclosure. Both the amount pledged and the amount
number should be listed.
Closed-End Consumer Lending User Guide
75
Explanation of Sample 2 (continued)
15. Itemization of Amount Financed –
a)“Itemization of Amount Financed” is the amount financed figure of $10,000.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $10,000.00
for furniture.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be marked ”N/A”.
d)“Prepaid Finance Charge” is not applicable since there are no additional prepaid finance
charges on this loan and should be marked ”N/A”.
e)“Amount Paid to Others on Your Behalf” is not applicable since no fees were paid on your
borrower’s behalf and should be marked ”N/A”.
16.Promise to Pay – For this example, the loan proceeds of $10,000.00 and the interest rate
of 4.00% are inserted. The interest rate is the same as the APR, since the interest is the only
component of the finance charge.
17.Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19. Signature – John Member signs as the borrower.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen both credit disability and
single credit life – X’s have been made in the “Yes” box under Credit Disability and Credit Life.
Since the cost of the insurance is an estimate, an (e) is printed on the document in the premium
schedule. Your credit union must obtain the insured’s signature and date of birth.
Closed-End Consumer Lending User Guide
76
Sample 3 – Automobile Purchase/Debt Payoff
Loan Scenario:
Request a loan for $16,000.00 to purchase a new car and pay off ABC Department Store in the
amount of $1,000.00 and Easy Charge, Inc. $1,200.00.
Details:
On June 1, 2013 John Q. Member requests a loan for $16,000.00 to purchase a new car, and he
wants your credit union to pay off ABC Department Store in the amount of $1,000.00 and Easy
Charge, Inc. in the amount of $1,200.00.
He is offering a new 2011 Mercury Cougar for security. The Cougar has a value of $23,000.00 with ID
number H1497564A.
Your credit union requires the borrower to pay a $4.00 filing fee. John wants to pay the fee in cash.
John has elected to purchase an extended warranty in the amount of $260.00 from your credit union.
The credit union has “upcharged” the price of the warranty, meaning that the borrower is being
charged more for the warranty than it costs the credit union. He has also elected to purchase credit
disability and credit life.
The first payment is due July 1, 2013. The interest rate is 7.50%. The loan is to be repaid in six
years.
Closed-End Consumer Lending User Guide
77
Sample 3
SAMPLE 3
1
X
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
1A
Borrower1NameandAddress
123456
Borrower2Name(andaddressifdifferentfromBorrower1)
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
6
4
$ 18,460.00
Non-Filing Insurance
Filing Fees
$ 4.00
3
7.50 % $4,640.43
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$24,843.47
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: N/A
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: 10
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
71 11
$345.05
MonthlyBeginning
1
12
$344.92
7/1/2013
6/1/2019
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Auto–Mercury
Cougar
Other (Describe):
Pledge of Shares $
Year
14
I.D. Number
Type/Lien Amount
2011 H1497564A in Account Number
$
Value
2-door
Key Number
$23,000.004545
in Account Number
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$18,460.00
15
Amount Paid to Others
on Your Behalf
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
Prepaid Finance Charge
a
b
c
d
$16,000.00
$ N/A
$ N/A
$ 260.00* e
To AutoWarrantyCorp.
$ 1,200.00
To EasyCharge,Inc.
IFANAMOUNTISMARKEDWITHANASTERISK(
$ 1,000.00
To ABCDepartmentStore
$ N/A
To *),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
LOAN AGREEMENT continued on reverse side
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
16 1. Promise to Pay: You promise to pay $
18,460.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
18
7.50 % per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
loans the interest rate is
17
Kansas
in Lending Disclosure. The initial interest rate is N/A
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X John Q. Member
19
(SEAL)
BORROWER1
DATE
X
X
7-1-2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
X
OTHERBORROWER
$ 1,260.93
482.11
$
$
X
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
COVERED MEMBER (Please Print)
e John Q. Member
e John Q. Member
e
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
7/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
78
Explanation of Sample 3
1.Fixed/Variable Rate – In this example, the interest rate is fixed so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract Interest rate are the
same. This is because there are no other components of the finance charge other than simple
interest.
3.Finance Charge – This is the dollar amount of a contract rate of 4.50% on $18,460.00 for 72
months.
4.Amount Financed – This amount will be $18,460.00. It includes $16,000.00 for the car,
$1,000.00 to ABC Department Store, $1,200.00 to Easy Charge, Inc. and $260.00 for the
extended warranty. The cost of credit insurance is not included in the amount financed.
5. Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance is included in the total of payments. When monthly credit
insurance is included in the payments, the finance charge plus the amount financed will not
equal the total of payments.
6.Filing Fee – In this example, the filing fee of $4.00 is paid in cash. Even though it is paid in cash,
when your credit union passes the cost of the filing fee on to your borrower, the amount must be
disclosed in this section whether paid in cash or financed.
7.Non-Filing Insurance – In this example, the credit union does not have non-filing insurance.
A credit union cannot charge a borrower more for non-filing insurance than it would cost for
actually filing, unless the additional cost is added to the finance charge.
8.Variable Rate – This example is for a fixed rate loan. The “Variable Rate” section is not
applicable and should be marked ”N/A”.
9.Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10.Late Charge – For this example, the late charge is 20% of interest due if seven or more days
late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late charge,
it must be disclosed.
11.Number of Payments – The number of payments required to repay the loan is 72.
12.Amount of Payments – The payments include the cost of both credit disability and single
credit life.
13. When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and last payment.
14.Security – For this example, the collateral is the new car. A full description of the collateral
should be shown in the “Security” section of the Truth in Lending Disclosure.
Closed-End Consumer Lending User Guide
79
Explanation of Sample 3 (continued)
15. Itemization of Amount Financed –
a)Itemization of Amount Financed” is the amount financed figure of $18,460.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $16,000.00
for the car.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be marked ”N/A”.
d)“Prepaid Finance Charge” is not applicable since there are not any additional prepaid finance
charges on this loan and should be marked ”N/A”.
e)“Amount Paid to Others on Your Behalf” is $260.00 for the extended warranty payable to
Auto Warranty Corp. There is an asterisk by this since the credit union is retaining a portion
of the amount. $1,000.00 was paid directly to ABC Department Store and $1,200.00 was
paid directly to Easy Charge, Inc. (Since the borrower directed the credit union to pay these
bills directly, they are shown here; however, if the monies would have been distributed to the
borrower, they would have been disclosed under “Amount Given to You Directly.”) Note: The
$4.00 filing fee was not included in the “Itemization of Amount Financed” because it was paid
in cash.
16.Promise to Pay – For this example, the loan proceeds of $18,460.00 and the interest rate
of 7.50% are inserted. The interest rate is the same as the APR, since the interest is the only
component of the finance charge.
17.Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19.Signature – John Member signs as the borrower, as sole owner of the car.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen both credit disability and
single credit life – X’s have been made in the “Yes” box under Credit Disability and Credit Life.
Since the cost of the insurance is an estimate, an (e) is printed on the document in the premium
schedule. Your credit union must obtain the insured’s signature and date of birth.
Closed-End Consumer Lending User Guide
80
Sample 4 – Variable Rate
Loan Scenario:
Purchase a boat.
Details:
On June 1, 2013 John Q. Member requests a loan for $10,000.00 to purchase a boat.
He is offering the boat as security.
John elects credit disability insurance and declines credit life insurance.
Your credit union does not offer property insurance; however, they require John to obtain such
insurance.
The first payment is due July 1, 2013. The interest rate is variable and the initial rate is 6.00%. The
loan is to be repaid in five years.
Closed-End Consumer Lending User Guide
81
Sample 4
SAMPLE 4
FixedRate
1
Thank You For Borrowing At Your Credit Union
X
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
VariableRate
LoanDate
LoanNumber
AccountNumber
28B
6-1-2013
Borrower1NameandAddress
12347
Borrower2Name(andaddressifdifferentfromBorrower1)
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
4
$ 10,000.00
Non-Filing Insurance
6
$ N/A
3
6.00 % $ 1,719.64
Filing Fees
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$ 12,291.62
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: VariableRate:TheannualpercentageratemayincreaseduringthetermofthistransactionifthePrimeRatepublishedintheWallStreetJournal(Index)
changes.Wewilladdamarginof2.5%totheindexvalue.Theratewillchangemonthlyonthefirstdayofthemonth.Theratewillneverbehigherthanthemaximum
rateallowedbylaw,anditwillneverbelessthan6%.Anyinterestrateincreasewillresultinmorepaymentsofthesameamount.
Ifyourloanwerefor$10,000at10%for60months,andtherateincreasedto10.5%after6months,youwillhavetomakeoneadditionalpayment.
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: N/A
Your Payment
Schedule will be:
10
Number of Payments
Amount of Payments
When Payments Are Due
$202.99
$112.22
MonthlyBeginning
59 11
1
12
7/1/2013
6/1/2018
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Boat
Property/Model/Make
30ft.
Other (Describe):
Pledge of Shares $
Year
I.D. Number
Type/Lien Amount
2009 ZX12479YZ 14
in Account Number
Value
N/A Key Number
$17,000.00
in Account Number
$
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$10,000.00
15
Amount Paid to Others
on Your Behalf
a
$ $ N/A
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
b
Prepaid Finance Charge
c
d
$ N/A
$
To
IFANAMOUNTISMARKEDWITHANASTERISK(
),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
$ N/A
To N/A
*
$10,000.00
To e
To N/A
$ N/A
LOAN AGREEMENT continued on reverse side
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
16 1. Promise to Pay: You promise to pay $
10,000.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
18
N/A
loans the interest rate is
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
17
Kansas
in Lending Disclosure. The initial interest rate is
6.00 % per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection
Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X John Q. Member
19
(SEAL)
BORROWER1
DATE
X
X
6-1-2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
OTHERBORROWER
$
$
$
X
X
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
553.61
e
COVERED MEMBER (Please Print)
John Q. Member
e
e
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
82
Explanation of Sample 4
1. Fixed/Variable Rate – In this example, the interest rate is variable, so the “Variable Rate” box is
checked.
2. Annual Percentage Rate – In this example, the APR and the contract Interest rate are 6.00%.
3.Finance Charge – This is the dollar amount of a contract rate of 6.00% for 60 months.
4.Amount Financed – The amount will be $10,000.00 for the boat.
5. Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of the credit disability insurance is included in the total of payments.
6.Filing Fee – In this example, there is no filing fee. If your credit union passes the cost of a filing
fee onto your borrowers, the amount must be disclosed in this section, whether paid in cash or
financed.
7.Non-Filing Insurance – In this example, the credit union does not have non-filing insurance.
A credit union cannot charge a borrower more for non-filing insurance than it would cost for
actually filing, unless the additional cost is added to the finance charge.
8.Variable Rate – This example is for a variable rate loan, variable rate language would appear
as follows: The APR may increase during the term of this transaction if the Prime Rate published
in The Wall Street Journal (Index) changes. We will add a margin of 2.50% to the index value.
The rate will change monthly on the first day of the month. The rate will never be higher than the
maximum rate allowed by law, and it will never be less than 6.00%. Any interest rate increases
result in more payments of the same amount. The note disclosure would also need to appear. In
this example the note disclosure is: If your loan were for $10,000.00 at 10.00% for 60 months,
and the rate increased to 10.50% after 6 months, you will have to make one additional payment.
9.Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10.Late Charge – For this example, there is no late charge, so N/A is used. If your credit union
charges a late charge, it must be disclosed.
11. N
umber of Payments – For this example, the number of payments required to repay the loan
is 60.
12.Amount of Payments – The payments include the cost of credit disability insurance.
13.When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and the last payment.
14.Security – For this example, the collateral is the boat. A full description of the collateral should
be shown in the “Security” section of the Truth in Lending Disclosure.
Closed-End Consumer Lending User Guide
83
Explanation of Sample 4 (continued)
15.Itemization of Amount Financed –
a)“Itemization of Amount Financed” is the amount financed figure of $10,000.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $10,000.00
for the boat.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be marked ”N/A”.
d)“Prepaid Finance Charge” is not applicable since there are no prepaid finance charges and
should be marked ”N/A”.
e)“Amount Paid to Others on Your Behalf” is not applicable since your credit union is not paying
off any other amounts to others and should be marked ”N/A”.
16. Promise to Pay – For this example, the loan proceeds of $10,000.00 and the initial interest rate
of 6.00% are inserted.
17.Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19.Signature – John Member signs as the borrower.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen credit disability but declined
credit life – X’s have been made in the “Yes” box under Credit Disability and checked “No” box
under Credit Life. Make sure the borrower signs the credit insurance enrollment document,
whether they elected insurance or not. Since the cost of the insurance is an estimate, an (e) is
printed on the document in the premium schedule.
Closed-End Consumer Lending User Guide
84
Sample 5 – Motorcycle Purchase, Car Given as Collateral, Cash Prepaid
Finance Charge
Loan Scenario:
Purchase a motorcycle, pay off some existing revolving credit balances. A car is given as collateral
for the loan. This loan includes a prepaid finance charge, which is being paid for in cash.
Details:
On June 1, 2013 John Q. Member requests a loan for $10,000.00 to purchase a motorcycle.
He is offering a 2011 Ford Taurus for security, with a value of $14,000.00 – ID No. 321098A.
There is a prepaid finance charge of $100.00 which John is paying for in cash.
John does not want either credit disability or credit life insurance.
Your credit union does not offer property insurance; however, they require John to obtain such
insurance.
The first payment is due July 1, 2013. The interest rate is 6.00%. The loan is to be repaid in four
years.
Closed-End Consumer Lending User Guide
85
Sample 5
SAMPLE 5
1
X
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
6791
Borrower1NameandAddress
1234-1
Borrower2Name(andaddressifdifferentfromBorrower1)
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
6
4
$ 9,900.00
Non-Filing Insurance
Filing Fees
$ N/A
3
6.5230 % $1,374.33
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$11,274.33
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: N/A
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: 10
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
47 11
$234.89
MonthlyBeginning
1
12
$234.50
7/1/2013
6/1/2017
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Auto–Ford
Taurus
Other (Describe):
Pledge of Shares $
Year
I.D. Number
Type/Lien Amount
2011 321098A
14
in Account Number
$
Value
4-door
Key Number
$14,000.003177719
in Account Number
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$9,900.00
15
LOAN AGREEMENT
Amount Given to You Directly
a
$ N/A
$ N/A
Amount Paid to Others
on Your Behalf
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
e
Amount Paid on Your Account
b
Prepaid Finance Charge
c
d
$ 100.00
$ N/A
To
IFANAMOUNTISMARKEDWITHANASTERISK(
$ N/A
To
*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
$10,000.00
To
To
$ N/A
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
16 1. Promise to Pay: You promise to pay $
10,000.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
18
continued on reverse side
6.00 % per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
loans the interest rate is
17
Kansas
in Lending Disclosure. The initial interest rate is N/A
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X John Q. Member
19
(SEAL)
BORROWER1
DATE
X
X
6/1/2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
OTHERBORROWER
$
$
$
X
X
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
COVERED MEMBER (Please Print)
e
e
e
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
86
Explanation of Sample 5
1. Fixed/Variable Rate – In this example, the interest rate is fixed, so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract Interest rate are different.
This is because your credit union charges a prepaid finance charge. A prepaid finance charge
affects the calculation of the APR, whether it is financed or paid in cash.
3. Finance Charge – This is the dollar amount of a contract rate of 6.00% on $10,000.00 for 48
months.
4.Amount Financed – The amount will be $9,900.00. To obtain this amount, subtract $100.00 for
the prepaid finance charge from this loan.
5. Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance would be included in the total of payments, if John had
elected insurance.
6. Filing Fee – In this example, there is no filing fee. If your credit union passes the cost of a filing
fee onto your borrowers, the amount must be disclosed in this section, whether paid in cash or
financed.
7. Non-Filing Insurance – In this example, the credit union does not have non-filing insurance.
A credit union cannot charge a borrower more for non-filing insurance than it would cost for
actually filing, unless the additional cost is added to the finance charge.
8.Variable Rate – This example is for a fixed rate loan. The “Variable Rate” section is not
applicable and should be marked ”N/A”.
9. Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10.Late Charge – For this example, the late charge is 20% of interest due if seven (7) or more days
late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late charge,
it must be disclosed.
11.Number of Payments – For this example, the number of payments required to repay the loan is
48.
12.Amount of Payments – The cost of the payment doesn’t include any insurance.
13.When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and last payment.
14.Security – For this example, the collateral is a car which John already owns. A full description of
the collateral should be shown in the “Security” section of the Truth in Lending Disclosure.
Closed-End Consumer Lending User Guide
87
Explanation of Sample 5 (continued)
15.Itemization of Amount Financed – Notice that the dollar amounts do not add up when there is
a prepaid finance charge.
a)“Itemization of Amount Financed” is the amount financed figure of $9,900.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $10,000.00
for a motorcycle.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be marked ”N/A”.
d)“Prepaid Finance Charge” is $100.00, that John has paid in cash.
e)“Amount Paid to Others on Your Behalf” is not applicable since your credit union is not paying
off any other amounts to others and should be marked ”N/A”.
16.Promise to Pay – For this example, the loan proceeds of $10,000.00 and the interest rate of
6.00% are inserted.
17. Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19.Signature – John Member signs as the borrower.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen neither credit disability
nor credit life – X’s have been made in the “No” box under Credit Disability and Credit Life.
Make sure the borrower signs the credit insurance enrollment document, whether they elected
insurance or not.
Closed-End Consumer Lending User Guide
88
Sample 6 – Mobile Home
Loan Scenario:
Purchase a mobile home.
Details:
On June 1, 2013 Joan Q. Member requests a loan for $25,000.00 to purchase a mobile home for
their primary residence.
She is offering a 2009 mobile home with a value of $30,000.00, ID No. 321098A.
The credit union will charge a $10.00 credit report fee and a $90.00 appraisal fee, which Joan will
pay for in cash.
Joan does not want either credit disability or credit life insurance.
Your credit union does not offer property insurance; however, they require Joan to obtain such
insurance.
The first payment is due July 1, 2013. The interest rate is 8.00%. The loan is to be repaid in six
years.
Closed-End Consumer Lending User Guide
89
Sample 6 – Page 1
SAMPLE 6
Loan and Security Agreements
and Disclosure Statement
LOAN DATE
LOAN NUMBER
ACCOUNT NUMBER
6791
6-1-2012
BORROWER 1
NAME AND ADDRESS
GROUP POLICY NUMBER
1234-1
MATURITY DATE
6-1-2018
BORROWER 2
NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)
Joan Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE 'e' means an estimate
ANNUAL PERCENTAGE RATE
FINANCE CHARGE
Amount Financed
Total of Payments
Total Sale Price
The cost of your credit as a yearly rate.
The dollar amount the
credit will cost you.
The amount of credit
provided to you or on
your behalf.
The amount you will have
paid after you have made
all payments as scheduled.
The total cost of your purchase on credit is
1
$ 6,592.89
8.00 %
$ 25,000.00
9
3
$ 31,692.89
$
which includes your
downpayment of $
4
.
Prepayment: If you pay off early you will not have to
pay a penalty.
INTEREST RATE AND PAYMENT SUMMARY
Rate & Monthly Payment Required Deposit: The Annual Percentage Rate does
Interest Rate
5
8.0 %
Principal + Interest Payment
$ 440.19
6
Est. Taxes + Insurance (Escrow)
(Includes Private Mortgage Insurance)
$0
7
Total Est. Monthly Payment
$ 440.19
not take into account your required deposit, if any.
Property Insurance: You may obtain property
insurance from anyone you want that is acceptable to
the Credit Union. If you get the insurance from us,
you will pay $
Assumption: Someone buying your dwelling cannot
assume the remainder of the loan on the original
terms.
Non-Filing Insurance
There is no guarantee that you will be able to refinance to lower your Filing Fees
8
rate and payments.
$
Balloon Payment (Check if applicable)
$
Final Balloon Payment due
$
Late Charge: 20% of interest due if 7 or more days late, minimum of $5.00, maximum of $20.00.
9
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your
shares and dividends and, if any, your deposits and interest in the Credit Union; and the property described below:
Collateral
Value
Property/Model/Make
Key Number
Type
Year I.D. Number
Mobile Home
2009
$
$ 30,000.00
$
321098A
10
Other (Describe)
Pledge of Shares $
in Account No.
$
in Account No.
See your contract documents for any additional information about nonpayment, default, and any required repayment in full before the
scheduled date.
11
SIGNATURES
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is
described in the "Security" section of the Truth in Lending Disclosure, you also agree to the terms of the Security
Agreement. If you sign, or otherwise authenticate, as "Owner of Property" you agree only to the terms of the Security
Agreement.
CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
Borrower 1 Signature
Date
X
Date
X
Other Borrower
(Seal)
Owner of Property
Witness
Date
X
(Seal)
Signature
Borrower 2 Signature
(Seal)
Signature
Date
X
Other Borrower
CUNA Mutual Group 2011 All Rights Reserved
Closed-End Consumer Lending User Guide
(Seal)
Owner of Property
Witness
NXX042-e
90
Explanation of Sample 6 – Page 1
1.Annual Percentage Rate – In this example, the APR and the contract Interest rate are the
same, because the fees for the credit report and appraisal are not considered prepaid finance
charges when purchasing a mobile home as the borrower’s primary residence.
2.Finance Charge – This is the dollar amount of a contract rate of 8.00% on $25,000.00 for 72
months.
3.Amount Financed – The amount will be $25,000.00.
4. Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance would be included in the total of payments, if Joan had
elected insurance.
5. Interest Rate – The contractual interest rate is 8.00%.
6.Principal & Interest Payment – This is the monthly principal and interest figure equal to
$440.19.
7.Estimated Taxes and Insurance (Escrow) including Private Mortgage Insurance – This is
the monthly escrow amount for taxes, insurance and private mortgage insurance if escrow is
required.
8.Total Estimate Monthly Payment – The Total estimated monthly payment is $440.19 since an
escrow payment is not required.
9. Late Charge – For this example, the late charge is 20% of interest due if seven or more days
late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late charge,
it must be disclosed.
10.Security – For this example, the property offered is the mobile home. A full description of the
collateral should be shown in the “Security” section of the Truth in Lending Disclosure.
11.Signature – Joan Member signs as the borrower.
Closed-End Consumer Lending User Guide
91
Sample 6 – Page 2
Credit Union
Borrower(s)
Loan No.
12
Acct. No.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
Amount Given to You Directly
Amount Paid on Your Account
Prepaid Finance Charge
$ 25,000.00 a
$ 25,000.00 b
$ N/A c
$ N/A d
Amounts Paid to Others on Your Behalf: (If an amount is marked with an asterisk (*) we will be retaining a portion of the amount.)
$
$
$
$
$
$
$
To
To
To
To
To
To
To
$
$
$
$
$
$
$
e
To
To
To
To
To
To
To
LOAN AGREEMENT
In this Loan Agreement ("Agreement") all references to "Credit Union," "we," "our," or "us," mean the Credit Union whose name
appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you" or "your" mean each
person who signs, or otherwise authenticates, this Agreement as a borrower.
1.
PROMISE TO PAY - You promise to pay $
to the Credit Union plus interest on the unpaid balance until what you owe
13
has been repaid. The interest rate is
% per year. You will pay principal and interest by making payments each month. Your
initial monthly payment will be in the amount of U.S. $
. You will make payments on the
day of each month
beginning on
. You will make these payments every month until you have paid all of the principal and interest and any other
charges, described below, that you may owe under this Note. If, on
, you still owe amounts under this Note, you will pay
all amounts in full on that date.
14 Collection Costs:
2. PAYMENTS - If you elect voluntary payment protection, we will
include the premium or program fee in your payments. If you
subsequently elect voluntary payment protection, we will either
include the premium or program fee in your payments or extend
the term of your loan. If the term is extended, you will be required
to make additional payments of the scheduled amount, until what
you owe has been paid. You may prepay any amount without
penalty. If you prepay any part of what you owe, you are still
required to make the regularly scheduled payments, unless we
have agreed to a change in the due date. Because this is a simple
interest loan, if you do not make payments exactly on the due
date, your final payment may be more or less than the amount of
the final payment that is disclosed. You promise to make all
payments to the place we choose. If this loan refinances another
loan we have with you, the other loan will be canceled and
refinanced as of the date of this loan. Unless otherwise required
by law, payments will be applied to amounts owed in the manner
we choose.
3. LOAN PROCEEDS BY MAIL - If the proceeds of this loan are
mailed to you, interest on this loan begins on the date the loan
proceeds are mailed to you.
4. SECURITY FOR LOAN - This Agreement is secured by all
property described in the "Security" section of the Truth in Lending
Disclosure. Property securing other loans you have with us also
secures this loan, unless the property is a dwelling. In addition to
your pledge of shares, we may also have what is known as a
statutory lien on all individual and joint accounts you have with us.
A statutory lien means we have the right under federal law and
many state laws to claim an interest in your accounts. We can
enforce a statutory lien against your shares and dividends, and if
any, interest and deposits, in all individual and joint accounts you
have with us to satisfy any outstanding financial obligation that is
due and payable to us. We may exercise our right to enforce this
lien without further notice to you, to the extent permitted by law.
For all borrowers: You pledge as security for this loan all shares
and dividends and, if any, all deposits and interest in all joint and
individual accounts you have with the Credit Union now and in the
future. The statutory lien and/or your pledge will allow us to apply
the funds in your account(s) to what you owe when you are in
default. The statutory lien and your pledge do not apply to any
Individual Retirement Account or any other account that would
lose special tax treatment under state or federal law if given as
security.
5. DEFAULT - You will be in default under this Agreement if you
do not make a payment of the amount required on or before the
date it is due. You will be in default if you break any promise you
made in connection with this loan or if anyone is in default under
any security agreement made in connection with this Agreement.
You will be in default if you die, file for bankruptcy, become
insolvent (that is, unable to pay your bills and loans as they
become due), or if you made any false or misleading statements in
your loan application. You will also be in default if something
happens that we believe may seriously affect your ability to repay
what you owe under this Agreement or if you are in default under
any other loan agreement you have with us.
6. ACTIONS AFTER DEFAULT - When you are in default, we may
demand immediate payment of the entire unpaid balance under this
Agreement. You waive any right you have to receive demand for
payment, notice of intent to demand immediate payment and notice
of demand for immediate payment. If we demand immediate
payment, you will continue to pay interest at the rate provided for in
this Agreement, until what you owe has been repaid. We will also
apply against what you owe any shares and/or deposits given as
security under this Agreement. We may also exercise any other
rights given by law when you are in default.
7. EACH PERSON RESPONSIBLE - Each person who signs, or
otherwise authenticates, this Agreement will be individually and
jointly responsible for paying the entire amount owed under this
Agreement. This means we can enforce our rights against any one
of you individually or against all of you together.
8. LATE CHARGE - If you are late in making a payment, you
promise to pay the late charge shown in the Truth in Lending
Disclosure. If no late charge is shown, you will not be charged one.
9. DELAY IN ENFORCING RIGHTS - We can delay enforcing any of
our rights under this Agreement any number of times without losing
the ability to exercise our rights later. We can enforce this
Agreement against your heirs or legal representatives.
10. CONTINUED EFFECTIVENESS - If any part of this Agreement is
determined by a court to be unenforceable, the rest will remain in
effect.
11. NOTICES - Notices will be sent to you at the most recent
address you have given us in writing. Notice to any one of you will
be notice to all.
12. USE OF ACCOUNT - You promise to use your account for
consumer (personal, family or household) purposes, unless the
Credit Union gives you written permission to use the account also
for agricultural or commercial purposes, or to purchase real estate.
13. NO ORAL AGREEMENTS -- THIS NOTE CONSTITUTES A
"WRITTEN LOAN AGREEMENT" PURSUANT TO SECTION 26.02
OF THE TEXAS BUSINESS AND COMMERCE CODE, IF SUCH
SECTION APPLIES.
THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
14. OTHER PROVISIONS -
NXX042-e
Closed-End Consumer Lending User Guide
92
Explanation of Sample 6 – Page 2
12.Itemization of Amount Financed –
a)“Itemization of Amount Financed” is the amount financed figure of $25,000.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $25,000.00
for a mobile home.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be marked ”N/A”.
d)“Prepaid Finance Charge” is not applicable. The credit report fee and appraisal fee are not
finance charges when the purpose of the loan is to purchase a mobile home to be used as
the borrower’s principal dwelling.
e)“Amount Paid to Others on Your Behalf” is not applicable.
13.Promise to Pay – For this example, the monthly payment of $440.19, the first payment date of
July 1, 2010, maturity date 6/1/2016, and the interest rate of 8.00% are inserted.
14. Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
Closed-End Consumer Lending User Guide
93
Sample 7 – Total Sales Price
Loan Scenario:
Finance the sale of a repossessed car to Jose and Maria Member.
Details:
On June 1, 2013 Jose and Maria Member submit a sealed bid of $13,000.00 to purchase a 2011
Ford Minivan. ID No. 3210000.
This vehicle had been repossessed by the credit union. They will give this property as security for the
loan. The property is valued at $15,000.00. They will make a $1000.00 downpayment.
There is a loan processing fee (prepaid finance charge) of $100.00 that Jose and Maria are paying
for in cash.
Jose and Maria want single credit disability and joint credit life insurance.
Your credit union does not offer property insurance; however, they required Jose and Maria to obtain
such insurance.
The first payment is July 1, 2013. The interest rate is 8.00%. The loan is to be repaid in five years.
Closed-End Consumer Lending User Guide
94
Sample 7
SAMPLE 7
1
X
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
7101
Borrower1NameandAddress
46071
Borrower2Name(andaddressifdifferentfromBorrower1)
Maria Member
Jose Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
7
4
$ 11,900.00
Non-Filing Insurance
Filing Fees
$ N/A
3
8.3562 % $2,767.39
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$15,774.54
$ 15,767.39
which includes your downpayment of
8
$ N/A
6
$ 1,000.00
Variable Rate: N/A
9
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
10
Late Charge: 11
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
59 12
$262.91
MonthlyBeginning
1
13
$262.85
7/1/2013
6/1/2018
14
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Auto–Ford
Minivan
Other (Describe):
Pledge of Shares $
Year
I.D. Number
Type/Lien Amount
2011 3210000
15
in Account Number
Value
4-door
Key Number
$15,000.00084899
in Account Number
$
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$11,900.00
16
Amount Given to You Directly
a
$ N/A
$ N/A
Amount Paid to Others
on Your Behalf
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
e
Amount Paid on Your Account
b
Prepaid Finance Charge
c
d
$ 100.00
$ N/A
To
IFANAMOUNTISMARKEDWITHANASTERISK(
$ N/A
To
*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
$12,000.00
To
To
$ N/A
17 X CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
18 1. Promise to Pay: You promise to pay $
12,000.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
LOAN AGREEMENT
20
continued on reverse side
loans the interest rate is 8.00
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
19
Kansas
in Lending Disclosure. The initial interest rate is N/A
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X Jose Member
21
(SEAL)
BORROWER1
DATE
X
X Maria Member
6-1-2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
X
OTHERBORROWER
OWNEROFPROPERTY
$
$
$
X
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM /SCHEDULE
22 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
6-1-2013
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
COVERED MEMBER (Please Print)
679.44
e Jose Member
427.71
e
e Jose Member and Maria Member
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
Jose Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
Maria Member
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
6/1/2013
DATE
NXX01B
95
Explanation of Sample 7
1.Fixed/Variable Rate – In this example, the interest rate is fixed so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract Interest rate are different.
This is because your credit union charges a prepaid finance charge. A prepaid finance charge is
included in the APR whether it is financed or paid in cash.
3. F
inance Charge – This is the dollar amount of a contract rate of 8.00% on $12,000.00 for 60
months.
4.Amount Financed – The amount will be $11,900.00. It includes $12,000.00 to pay for the van
minus the $100.00 loan processing fee which is a prepaid finance charge.
5. T
otal of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance would be included in the total of payments.
6.Total Sale Price – The total sale price must be entered here. It is determined by adding the
following together :
• Cash Price
$13,000.00
• Any other amounts financed
(but not finance charge)
$13,000.00
• Finance Charge (Needs to be Computed)
$ 2,767.39
• Total
$15,767.39
The downpayment also needs to be disclosed in this scenario. There was a downpayment of
$1,000.00.
Closed-End Consumer Lending User Guide
96
Sample 8 – Motorcycle Purchase, Financed Prepaid Finance Charge
Loan Scenario:
Purchase a motorcycle, pay off some existing revolving credit balances. A car is given as collateral
for the loan. This loan includes a prepaid finance charge that is being financed.
Details:
On June 1, 2013 John Q. Member requests a loan for $10,500.00 to purchase a motorcycle and he
would like your credit union to payoff $200.00 to JSC Co. and $200.00 to Smith Company.
He is offering a 2011 Ford Taurus for security, with a value of $20,000.00 – ID No. 4321098A.
There is a prepaid finance charge of $100.00 which John is financing.
John does not want either credit disability or credit life insurance.
Your credit union does not offer property insurance; however, they require John to obtain such
insurance.
The first payment is due July 1, 2013. The interest rate is 8.00%. The loan is to be repaid in five
years.
Closed-End Consumer Lending User Guide
97
Sample 8
SAMPLE 8
1
X
Thank You For Borrowing At Your Credit Union
LOAN AND SECURITY AGREEMENTS
AND DISCLOSURE STATEMENT
FixedRate
VariableRate
LoanDate
LoanNumber
6-1-2013
AccountNumber
6791
Borrower1NameandAddress
1234-1
Borrower2Name(andaddressifdifferentfromBorrower1)
John Q. Member
1234 Main Street
Anytown, USA 12345
TRUTH IN LENDING DISCLOSURE ‘e’ means an estimate
Amount Financed
Total of Payments
ANNUAL PERCENTAGE RATE FINANCE CHARGE
The cost of your credit as a yearly rate. The dollar amount the credit will cost you. The amount of credit provided to you
or on your behalf.
2
4
$ 10,400.00
Non-Filing Insurance
6
$ N/A
3
8.4145 % $ 2,376.53
Filing Fees
Total Sale Price
The amount you will have paid after you The total cost of your purchase on credit is
have made all payments as scheduled.
5
$12,776.53
$
which includes your downpayment of
7
$ N/A
$
Variable Rate: N/A
8
Prepayment: If you pay off early you will not have to pay a penalty. Required Deposit: The Annual Percentage Rate does not take into account your required deposit, if any.
Property Insurance: You may obtain property insurance from anyone you want that is acceptable to the Credit Union. If you get the insurance from us, you will pay
$ N/A
9
Late Charge: 10
20%ofinterestdueif7ormoredayslate,minimumof$5.00,maximumof$20.00.
Your Payment
Number of Payments
Amount of Payments
When Payments Are Due
Schedule will be:
59 11
$212.95
MonthlyBeginning
1
12
$212.48
7/1/2013
6/1/2018
13
Security: Collateral securing other loans with the Credit Union may also secure this loan. You are giving a security interest in your shares and dividends and, if any, your
deposits and interest in the Credit Union; and the property described below:
Collateral
Property/Model/Make
Auto–Ford
Taurus
Other (Describe):
Pledge of Shares $
Year
14
I.D. Number
Type/Lien Amount
2011 321098A
in Account Number
$
Value
4-door
Key Number
$20,000.003177719
in Account Number
SEE YOUR CONTRACT DOCUMENTS FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIRED REPAYMENT IN FULL BEFORE THE SCHEDULED DATE.
ITEMIZATION OF THE AMOUNT FINANCED
Itemization of Amount Financed of
$10,400.00
15
a
$ 200.00
$ 200.00
Amount Paid to Others
on Your Behalf
LOAN AGREEMENT
IFANAMOUNTISMARKEDWITHANASTERISK(*),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
Amount Given to You Directly
Amount Paid on Your Account
Prepaid Finance Charge
b
c
d
$10,000.00
$ N/A
$ 100.00
To JSCCo.
$ N/A
To
e
IFANAMOUNTISMARKEDWITHANASTERISK(
),WEWILLBERETAININGAPORTIONOFTHEAMOUNT.
To SmithCompany
$ N/A
To
*
CONSUMERS’ CLAIMS AND DEFENSES NOTICE — IF CHECKED, SEE REVERSE SIDE FOR NOTICE
continued on reverse side
16 1. Promise to Pay: You promise to pay $
10,500.00
to the Credit Union plus interest on the unpaid balance until what you owe has been repaid. For fixed rate
18
loans the interest rate is 8.00
% per year. For variable rate loans, the interest rate will vary in accordance with the terms of the variable rate explained in the Truth
17
Kansas
in Lending Disclosure. The initial interest rate is N/A
% per year. 2. These Agreements are governed by the laws of ____________________________________________.
3. Collection
Costs:
SIGNATURES FOR LOAN AND SECURITY AGREEMENTS
VERMONT NOTICE TO CO-SIGNER: YOUR SIGNATURE ON THIS NOTE MEANS THAT YOU ARE EQUALLY LIABLE FOR REPAYMENT OF THIS LOAN. IF
THE BORROWER DOES NOT PAY, THE LENDER HAS A LEGAL RIGHT TO COLLECT FROM YOU.
NOTICE TO UTAH BORROWERS: This written agreement is a final expression of the agreement between you and the Credit Union. This written agreement may not be
contradicted by evidence of any oral agreement.
By signing, or otherwise authenticating, as Borrower, you agree to the terms of the Loan Agreement. If property is described in the “Security” section of the Truth in Lending
Disclosure, you also agree to the terms of the Security Agreement on the reverse side. If you sign, or otherwise authenticate, as “Owner of Property” you agree only to the
terms of the Security Agreement. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE AGREEMENT BEFORE YOU SIGN IT.
X John Q. Member
19
(SEAL)
BORROWER1
DATE
X
X
6-1-2013
OWNEROFPROPERTY
DATE
WITNESS
“You’’ or “Your’’ means the member and the joint insured (if applicable).
Credit insurance is voluntary and not required in order to obtain this loan.
You may select any insurer of your choice. You can get this insurance only
if you check the “yes’’ box below and sign your name and write in the date.
The rate you are charged for the insurance is subject to change. You will
receive written notice before any increase goes into effect. You have the
right to stop this insurance by notifying your credit union in writing. Your
signature below means you agree that:
• If you elect insurance, you authorize the credit union to add the charges
for insurance to your loan each month.
YES
NO
OTHERBORROWER
$
$
$
X
X
OWNEROFPROPERTY
DATE
WITNESS
• You are eligible for disability insurance only if you are working for wages
or profit for 25 hours a week or more on the date of any advance. If you
are not, that particular advance will not be insured until you return to
work. If you are off work because of temporary layoff, strike or vacation,
but soon to resume, you will be considered at work.
• You are eligible for insurance up to the Maximum Age for Insurance.
Insurance will stop when you reach that age.
NOTE: THE LIFE AND DISABILITY INSURANCE CONTAINS CERTAIN BENEFIT
EXCLUSIONS, INCLUDING A PRE-EXISTING CONDITION EXCLUSION.
PLEASE REFER TO YOUR CERTIFICATE FOR DETAILS.
PREMIUM SCHEDULE
X
SINGLECREDITDISABILITY
SINGLECREDITLIFE
JOINTCREDITLIFE
(SEAL)
CMFG Life Insurance Company • Madison, WI 53701-0391 • Phone: 800.356.2644
CREDITINSURANCEENROLLMENTFORM/SCHEDULE
20 YOU ELECT THE FOLLOWING INSURANCE COVERAGE(S)
DATE
X
(SEAL)
OTHERBORROWER
(SEAL)
BORROWER2
COVERED MEMBER (Please Print)
e
e
e
Ifyouaretotallydisabledformorethan 30 days,thenthedisabilitybenefitwillbeginwiththe 31st dayofdisability.
GROUPPOLICYNUMBER
RATEOFINTERESTUSEDONTHISLOAN
DATEOFISSUEOFTHISCERTIFICATE
MEMBER’SDATEOFBIRTH
INSURANCE MAXIMUMS
MAX.MONTHLYTOTALDISABILITYBENEFIT
MAX.INSURABLEBALANCEPERLOANACCOUNT
MAX.AGEFORINSURANCE
XXX-XXXX-X
JOINTINSURED’SDATEOFBIRTH
DISABILITY
LIFE
$600
$30,000
66
N/A
$30,000
70
SECONDARYBENEFICIARY(Ifyoudesiretonameone)
4-23-59
X
John Q. Member
SIGNATURE OF MEMBER (Be sure to check one of the boxes above.)
APP.825-0786
© CUNA Mutual Group 2000, 04-06, 08, 11, 12 All Rights Reserved
6/1/2013
DATE
X
SIGNATURE OF JOINT INSURED (CO-BORROWER)
(Only required if JOINT CREDIT LIFE coverage is selected)
CREDITUNIONCOPY
Closed-End Consumer Lending User Guide
DATE
NXX01B
98
Explanation of Sample 8
1.Fixed/Variable Rate – In this example, the interest rate is fixed, so the “Fixed Rate” box is
checked.
2.Annual Percentage Rate – In this example, the APR and the contract Interest rate are different.
This is because your credit union charges a prepaid finance charge. A prepaid finance charge
affects the calculation of the APR, whether it is financed or paid in cash.
3.Finance Charge – This is the dollar amount of a contract rate of 8.00% on $10,500.00 for 60
months, plus the amount of any prepaid finance charge.
4.Amount Financed – The amount financed is the loan amount less any prepaid finance charge.
The amount financed will be $10,400.00. To obtain this amount, add together $10,000.00 for the
motorcycle loan, $200.00 to JSC Co., $200.00 to Smith Company and $100.00 for the financed
prepaid finance charge. Then subtract $100.00 for the prepaid finance charge from this total to
obtain the amount financed.
5. Total of Payments – The amount of payments times the number of payments equals the total of
payments. The cost of credit insurance would be included in the total of payments, if John had
elected insurance.
6. Filing Fee – In this example, there is no filing fee. If your credit union passes the cost of a filing
fee onto your borrowers, the amount must be disclosed in this section, whether paid in cash or
financed.
7. Non-Filing Insurance – In this example, the credit union does not have non-filing insurance.
A credit union cannot charge a borrower more for non-filing insurance than it would cost for
actually filing, unless the additional cost is added to the finance charge.
8.Variable Rate – This example is for a fixed rate loan. The “Variable Rate” section is not
applicable and should be marked ”N/A”.
9.Property Insurance – If your credit union requires a borrower to obtain this insurance, the cost
must only be disclosed if the borrower purchases the insurance through your credit union at the
time the loan is disbursed. If your credit union doesn’t offer insurance, then use ”N/A”.
10.Late Charge – For this example, the late charge is 20.00% of interest due if seven (7) or more
days late with a minimum of $5.00 and maximum of $20.00. If your credit union charges a late
charge, it must be disclosed.
11.Number of Payments – For this example, the number of payments required to repay the loan
is 60.
12.Amount of Payments – The cost of the payment doesn’t include any insurance.
13.When Payments are Due – State the frequency (monthly, bi-weekly, etc.) of payments as well
as due date of first payment and last payment.
14.Security – For this example, the collateral is a car which John already owns. A full description of
the collateral should be shown in the “Security” section of the Truth in Lending Disclosure.
Closed-End Consumer Lending User Guide
99
Explanation of Sample 8 (continued)
15.Itemization of Amount Financed – Notice that the dollar amounts do not add up when there is
a prepaid finance charge.
a)“Itemization of Amount Financed” is the amount financed figure of $10,400.00.
b)“Amount Given to You Directly” is the amount disbursed to the borrower equal to $10,000.00
for a motorcycle.
c)“Amount Paid on Your Account” is not applicable since your borrower is not paying off any
existing loan balance with the credit union and should be
marked ”N/A”.
d)“Prepaid Finance Charge” is $100.00, that John is financing.
e)“Amount Paid to Others on Your Behalf” is $200.00 paid to JSC Co. and $200.00 paid to
Smith Company.
16. Promise to Pay – For this example, the loan proceeds of $10,500.00 and the interest rate of
8.00% are inserted.
17.Governing Law – For this example, the credit union has chosen to enter the state that applies
for the governing law provision. This is an optional field.
18.Collection Costs – Any collection costs your credit union wants to impose that are permissible
under state law are disclosed here.
19.Signature – John Member signs as the borrower.
20.Credit Insurance Enrollment – The borrower must check the appropriate box(es) under the
“Election of Insurance” section. For this example, John has chosen neither credit disability
or credit life – X’s have been made in the “No” box under Credit Disability and Credit Life.
Make sure the borrower signs the credit insurance enrollment document, whether they elected
insurance or not.
Closed-End Consumer Lending User Guide
100