QUESTION
Can a loan show a finance amount of one amount but only cut a check for a smaller amount?
Asked on Aug 30th, 2011 on Business Law - Missouri
More details to this question:
We got a personal loan with our truck as collateral from a guy we know who owns a used car dealership. He basically went through his bank like it was a new sale. The amount we received via check was $2000.00. My husband signed the paperwork then realized something wasn''t right and went right back to them. On the paperwork, it shows the finance rate of 18% (which he states is for the bank), the finance charge of $674.00; the finance amount of $2900.00. This is where my issue is. We didn''t finance $2900.00. We only got $2000.00 in a check. He states it is his share for giving us the loan for 2 years. ($900). Can he do that?
1 ANSWER
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It depends. It is certainly lawful for a broker or finder to charge a fee for arranging credit, although a $900 fee for arranging $2,000 in credit might be found by a court to be unconscionable. There is also a possibility of a violation of the Truth in Lending Act, a federal law which requires the disclosure of all costs of credit. If the "guy" was really the lender in this transaction, the cost of credit may not be properly disclosed and you may have the right to rescind the transaction. If you are dissatisfied with the transaction, you should go back to the "guy" and tell him that you would like to rescind the transaction. You can consult a local attorney if he refuses.
Answered on Aug 30th, 2011 at 11:18 PM