Closed-End Pre-Approved Vehicle Loans User...

Consumer Deposit Consumer Lending Real Estate Lending Business Services

Closed-EndPre-ApprovedVehicle Loans

User Guide

MXUG51 (1/13)© CUNA Mutual Group 2012 All Rights Reserved

P.O. Box 391 5910 Mineral Point Road Madison, WI 53701-0391 Email: [email protected]

ContentsChapter 1: General Information Introduction 1 Things to Consider 3 Document Listing 7Chapter 2: Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure Document Description 8 Document Sample 9, 15, 18, 21 Document Completion Instructions 10 Chapter 3: Truth in Lending Disclosure (Pre-Approved) Document Description 23 Document Sample 24 Document Completion Instructions 25 Chapter 4: Pre-Approved Express Draft (Site Draft) Document Description 30 Document Sample 31 Document Completion Instructions 32 Chapter 5: Pre-Approved Express Draft (Check) Document Description 34 Document Sample 35 Document Completion Instructions 36Chapter 6: Check Stock (Sample of Paper Check) Document Description 38 Document Sample 39, 40 Document Completion Instructions 40Chapter 7: Pre-Approved Express Draft Confirmation Receipt Document Description 41 Document Sample 42 Document Completion Instructions 43 Chapter 8: Frequently Asked Questions 45Chapter 9: Additional Guidance Sample 1 Vehicle purchase with Credit Insurance, GAP & financed Filing Fee 48 Sample 2 Vehicle purchase with Debt Protection, GAP & cash Filing Fee 63 Sample 3 Vehicle purchase without Debt Protection, with Extended Warranty

(MRC) and financed Filing Fee 76

Pre-Approved Vehicle Loans User Guide

Pre-Approved Vehicle Loans Guide 1

Chapter 1:

General Information

IntroductionThis guide is designed to help you understand how to use the Closed-End LOANLINER® Consumer Pre-Approved Vehicle Loan Documents. This guide describes each document in detail, including instructions for document completion. This guide also includes sample pre-approved loan transactions which may be helpful to you when completing loan documents at your credit union.

Definition - Closed-End CreditRegulation Z defines “Closed-end credit” as consumer credit other than “Open-end credit”. Closed-end 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 of the loan that has been paid back.

Closed-End Pre-Approved Vehicle Loan ProgramThe Closed-End Pre-Approved Vehicle Loan Program was designed exclusively for credit unions. We developed the documents for lending in all states. This program allows your members to shop for a vehicle with pre-approved loan terms in hand. Members will be empowered to negotiate the best price with Dealers knowing upfront what loan terms they can count on.

These documents do not replace your current closed-end lending documents you may be using but supplements your program with a streamlined and convenient approach to pre-approved vehicle lending.

Lending Programs SupportedThe Closed-End Pre-Approved Vehicle Loan Program is designed to handle vehicle loans only (e.g., car, truck, SUV, or van/minivan). The documents will not support other types of titled property (e.g., boats, campers, ATVs, etc.), other types of security, unsecured, or personal loans.

The program consists of the following documents: • Pre-Approved Loan and Security Agreement and Truth In Lending Disclosure • Truth In Lending Disclosure (Pre-Approved) • Pre-Approved Express Draft • Pre-Approved Express Draft Confirmation ReceiptRefer to the chart on page 7 for a break down of the different documents your credit union can order.

Payment Protection Considerations: The Closed-End Pre-Approved Vehicle Loan Program also supports Payment Protection products such as Credit Insurance or Debt Protection, as well as Guaranteed Asset Protection (GAP) and Extended Warranty (such as Mechanical Repair Coverage (MRC)). After qualifying your member, and offering Payment Protection, the member will be provided with the loan documentation. If the member elects Credit Insurance or Debt Protection, you will also provide them with the appropriate documentation to enroll. This documentation will disclose the cost of the coverage based on the maximum approved limit as the actual cost of coverage cannot be determined until after the loan transaction is complete and the actual loan amount is known.

Pre-Approved Vehicle Loans User Guide 2

If the member wishes to purchase GAP coverage, they can do so, however the GAP Waiver would not be completed until after the transaction is completed as the VIN number is required. Also with GAP, the cost is often financed into the loan. If this happens the credit union needs to make certain the member knows that the pre-approved amount needs to cover not only the costs of the vehicle purchase (sale price, tax, title, license, etc) but also the GAP coverage they are choosing to finance. This should be accomplished by reducing the “Approved Limit” dollar amount on the Pre-Approved Express Draft, so the member does not accidently overspend at the dealership.

Lastly for Extended Warranty (i.e. Mechanical Repair Coverage (MRC)), the member cannot purchase the coverage up front as the cost of the coverage varies based on the Make, Model, Year, Mileage, and Coverage Level. Therefore, similar to GAP, if the member wishes to purchase MRC, the credit union can deduct the estimated cost of the coverage from the “Approved Limit” dollar amount on the Pre-Approved Express Draft so the member does not accidently overspend at the dealership if the cost of coverage is being financed. Once the loan is completed, the MRC documentation can be prepared and the loan modified.

The following table provides an overview of Payment Protection Coverage and how it is integrated into the loan event.

Payment Protection Product

Up Front Sales Activity

When Documents

Can be Signed?

Impact on TransactionCan be Sold

Post Transaction

Debt Protection Sell When Elected by Member

Increases Payment Amounts and Total of

PaymentsYes

Credit Insurance Sell When Elected by Member

Increases Payment Amounts and Total of

PaymentsYes

GAP Sell After Vehicle Purchase

Reduces Pre-Approved amount on Pre-Approved Express Draft

(known amount)Yes

MRC (Extended Warranty)

Promote (sold after purchase)

After Vehicle Purchase

Reduces Pre-Approved amount on Pre-Approved Express Draft

(estimated amount)Yes

Process Summary for a Closed-End Pre-Approved Vehicle LoanStep 1 Credit union qualifies the member(s) to be pre-approved for a loan;

Step 2 Credit union offers or promotes Payment Protection products;

Step 3 Credit union provides the member with the Pre-Approved Loan and Security Agreement and Truth In Lending Disclosure, the Truth in Lending Disclosure (Pre-Approved) [as necessary], the Pre-Approved Express Draft, and any Payment Protection product documents;

Step 4 Member shops for a vehicle and negotiates sales price of a vehicle;

Step 5 Member and Dealer complete and sign the Pre-Approved Express Draft, in accordance with the specified instructions;

Step 6 Dealer sends to credit union (i.e. by fax or other means specified by the credit union) a copy of the completed and signed Pre-Approved Express Draft, the Purchase Agreement for the vehicle, and other required documents;

Step 7 Credit union verifies information meets the loan requirements and pays the Dealer;

Step 8 Credit union books the loan and sends the Pre-Approved Confirmation Receipt and a copy of the completed Pre-Approved Express Draft marked “Copy” or “Void” to the member.


Things to ConsiderThe Pre-Approved Vehicle Loan (PAVL) document suite creates many benefits for both credit union and member. They include:

Credit Union:• Helps generate vehicle loans• Supplements current closed-end lending offers (does not replace)• Integrates Payment Protection products (manage risk and generate income)• Powered by LOANLINER Documents to provide compliance peace of mindMember:• Efficient loan transaction (no need to visit credit union branch)• Pre-approved up to a maximum loan amount (know before you buy)• Empowered to negotiate best deal with the Dealer (cash position)• Easy election of Payment Protection products (manage risk)

These loan documents are designed to specifically support closed-end lending. PAVL does not replace your current consumer lending program or documents. Rather, it is another channel to reach members for loan generation. There are several considerations a credit union will want to examine as part of implementing PAVL. These considerations will impact the type of PAVL program offered to members and how the credit union will administer this program:

Dealer RelationshipsCredit unions should carefully consider what impact, if any, the offering of PAVL to members will have on existing relationships with Dealers. A best practice for credit unions is to visit key Dealers in advance of offering this loan program. The purpose of these visits is to introduce PAVL documents to the Dealers. Dealers will appreciate knowing what type of documents will be coming their way and how to properly complete the documents. This will be a good time to walk the Dealer through the Pre-Approved Express Draft and point out what documentation will be required of them to complete the transaction. Be sure to also explain any special terms or conditions your credit union plans to use with PAVL. Minimizing surprises will help foster a mutually beneficial relationship with the Dealer(s).

PAVL is not a replacement for indirect lending. The PAVL relationship is between the credit union and member and is typically established prior to the member shopping for a vehicle. This can be accomplished either directly from the member reaching out to the credit union or the credit union contacting targeted members (“A” or “B” members typically). With indirect lending, the relationship is between the Dealer and the member and is usually established following the negotiations of a vehicle deal. Credit unions should be aware that with PAVL, Dealers may still try to capture the member’s financing even though they are pre-approved for financing by the credit union. Members should be educated to know they are getting the “best” deal with their credit union and resist any attempt by the Dealer’s F&I person to flip the loan.

PAVL supports the credit union’s ability to limit what Dealers the members can purchase their vehicle from using the PAVL documents. If the credit union chooses to limit Dealers, a list of acceptable Dealers should be provided to the member at time of creating the Pre-Approved Express Draft. In the absence of a restricted listing of Dealers, members will be able to take the Pre-Approved Express Draft to any Dealer of their choosing.


A best practice is to name someone at the credit union to be the liaison or key contact for this lending program. Dealers should be referred to this person when there are questions or issues with the use of this new lending program. This credit union liaison may also want to create a contact database of all Dealers they have worked with in the event they need to resolve any PAVL issues from the credit union side of the deal.

Loan PoliciesPrior to implementing PAVL at your credit union, be sure to update your existing loan policies to incorporate this new loan offering. In addition, since this is a somewhat unique lending product, program parameters (rates, terms, credit rating, etc.) should be examined and considered for this loan product. Given the design of this product and associated risk, not all members may qualify for this type of loan.

However, given the unique aspects of this program, charging a prepaid finance charge could trigger re-disclosure requirements given the potential impact on APR pursuant to §1026.17(f). Contact the LOANLINER Department if you intend to offer a prepaid finance charge and have questions.

The credit union should consider what security measures will be implemented to make sure lost or stolen drafts are not processed or paid. In addition, when Pre-Approved Express Drafts are lost or stolen, members will more than likely need an entire new set of documents to take shopping so that if the originals are located they are not confused with any new Pre-Approved Express Drafts issued.

From time to time, members may wish to purchase a vehicle that exceeds the pre-approved amount on the Pre-Approved Express Draft. Will the credit union allow the member to request a second review of their creditworthiness in hopes the pre-approved amount would be increased? If so, then there will be processes needed for updating the member’s file and a complete new set of documents sent to the member.

Each Pre-Approved Express Draft comes with an expiration date listed as the “Void After” date. Will your credit union assign a date that is 14, 30, or 45 days out from approval? Credit unions will want to manage the risk exposure of these documents by assigning a “Void After” date that suits their risk tolerances. Determine how much member contact your credit union wants with members regarding outstanding Pre-Approved Express Drafts. Will there be follow-up correspondence with members advising them that their Pre-Approved Express Draft will expire shortly or that it has actually expired and encouraging them to revisit the credit union when they are ready to go shopping again? It may not be a bad idea to touch base with the Marketing Department for support and additional ideas on these points.

The Pre-Approved Express Draft contains the ability to support additional loan requirements. Are there special terms or limitations that you will want to apply to a loan or the vehicle being purchased with the loan proceeds (e.g. age of collateral, LTV, mileage of the vehicle, etc.)? Are there any member specific limitations (e.g. Bob Smith is limited to a model year 2010 or newer, but Sally Jones is only limited to a model year 2007 or newer)? If so, this will need to be noted on the Pre-Approved Express Draft.

Pre-Approved Express Draft ConsiderationsCredit unions should consider their membership, geographic location, and which Dealers their members may frequent in determining if the “check” or the “site draft” version of the Pre-Approved Express Draft is the best choice. “Checks” can be directly deposited by the Dealer and will be processed like any other check going through the check processing system. “Site drafts” cannot be deposited like a check. A “site draft” will need to be directly presented to the credit union for payment. Each option has its own benefits and considerations. For example, Dealers in a certain location may be more apt to accept a “check” as opposed to a “site draft.” Other credit unions, due to the make-up of their membership, may be more comfortable issuing “site drafts” to members instead of a “check.”


Processes need to be created to support the acceptance and processing of the Pre-Approved Express Draft the credit union chooses to use. Best practices to consider include:

• Create a Pre-Approved Express Draft log which will contain draft number, member name, approved amount, expiration or void after date, loan officer that approved the request, date Pre-Approved Express Draft received back at the credit union, final loan amount, and when loan was booked in system. Each credit union may have different needs that may extend beyond these categories in a log.

• Processes should be created around how a Pre-Approved Express Draft will be processed in the credit union (from issuance to booking in the host system). One item to consider is to identify who on staff will:

o Monitor when checks have cleared / site drafts have been returned

o Respond to member and Dealer inquiries

o Complete the Pre-Approved Express Draft log

o Follow-up with Dealers with outstanding documentation or information for in progress loans

o Conduct the loan closing

• Pre-Approved Express Draft (Check) specific issues: o Credit unions may find that the same level of security and processes that are typically

assigned with official or teller checks may be appropriate for Pre-Approved Express Drafts.

o Generally, checks are able to be returned unpaid to the Dealers by midnight the day after receipt at the credit union. This safety net empowers the credit union to return a check should the Dealer not provide all information or required materials are missing. It will also help in the event of a fraudulent loan transaction. A best practice is to directly contact the Dealer first to resolve any issues. Returning a check to the Dealer as a last resort.

o When using the Pre-Approved Express Draft (Check), it is a best practice to print the Pre-Approved Express Draft (Check) onto the Check Stock (Paper) prior to printing any other documents for the loan transaction. This is because the Check Stock (Paper) is preprinted with sequential Express Draft Numbers on them. This is the same Express Draft Number that is printed on the other Pre-Approved Vehicle Loan documents. Therefore, if you must reprint the Pre-Approved Express Draft (Check) onto the Check Stock (Paper) and have already printed the other Pre-Approved Vehicle Loan documents, you will need to dispose of all of the documents and start over.

Required Documentation From DealerIn order to complete the loan transaction, the Dealer will need to not only complete their section of the Pre-Approved Express Draft, they will also need to provide several documents to the credit union. These documents are identified on the Pre-Approved Express Draft. The Dealer agrees to provide these documents as part of the terms of being paid for the vehicle purchase. The documents requested include:

• Signed Purchase Agreement: This document confirms the collateral (VIN, description, etc.), value of deal, and purchasers/owners of the collateral. The document should be completed by an authorized representative of the Dealer and signed by the borrower(s) and the Dealer.


• Copy of fully executed Pre-Approved Express Draft: All fields should be completed on the Pre-Approved Express Draft and signed by the borrower(s) and an authorized representative of the Dealer. It is important for the credit union to get a copy of the entire Pre-Approved Express Draft (if using the Pre-Approved Express Draft (Check) this copy would include the back of the document (check) where the signed restrictive endorsement appears).

• NADA value or MSRP sticker: Which value is used depends on if the vehicle being purchased is “new” or “pre-owned”. This information documents the value of the collateral or vehicle being purchased. There may also be unique requirements the credit union puts on the loan such as LTV limits. This information will help to support that the loan is within any set requirements.

• Copy of Application for Title: It is important for the credit union to know that a title is being filed on the vehicle and that the credit union is being listed as having a security interest in the vehicle.

If any documentation is missing or incomplete, the credit union should call the Dealer directly to resolve the issue. The Dealer should not be paid for the vehicle until all documents are completed, signed, and presented to the credit union as requested. This allows the credit union to verify that the loan meets the pre-approved loan requirements as established by the credit union.

If you have any questions, feel free to contact the LOANLINER Department at 800 356 5012


Document Listing

VERSIONFORMAT

TYPE

1MEDIATYPE

DOCUMENT NUMBER

STATES USED IN

FILING COPY

FILING STATES

PRE-APPROVED LOAN AND SECURITY AGREEMENT AND TRUTH IN LENDING DISCLOSUREStandard Fixed Rate E NXX23* All other states plus federally chartered credit

unions lending to borrowers in South Carolina Yes Arkansas, Ohio,

South Dakota, Wyoming

Right to Cure Fixed Rate E NRC23* 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 Rate E NFL23* Florida No

Iowa Fixed Rate E NIA23* Iowa No

Louisiana Fixed Rate E NLA23* Louisiana Yes Louisiana

New Hampshire Fixed Rate E NNH23* New Hampshire No

Virginia Fixed Rate E NVA23* Virginia No

Wisconsin Fixed Rate E NWI23* Wisconsin No

TRUTH IN LENDING DISCLOSURE (Pre-Approved)Standard Fixed Rate E NXX33* All states except for credit unions with Virginia

credit insuranceN/A N/A

Florida Fixed Rate E NFL33* Florida N/A N/A

Virginia Fixed Rate E NVA33* Credit unions with Virginia credit insurance N/A N/A

PRE-APPROVED EXPRESS DRAFTSite Draft Fixed Rate E NXX73* All States N/A N/A

Check Fixed Rate E NXX93* All States N/A N/A

Florida Site Draft Fixed Rate E NFL73* Florida N/A N/A

Florida Check Fixed Rate E NFL93* Florida N/A N/A

PRE-APPROVED EXPRESS DRAFT CONFIRMATION RECEIPTCredit Insurance Fixed Rate E NXX83* All States N/A N/A

Debt Protection Fixed Rate E NFL63* All States N/A N/A

Florida Credit Insurance Fixed Rate E NFL83* Florida N/A N/A

Florida Debt Protection Fixed Rate E NFL63* Florida N/A N/A

CHECK STOCK

Check Stock N/A P JXX02* All States N/A N/A

* Document Version1 Media Type E = Electronic P = Paper

Differences between the Standard and State Specific Pre-Approved Loan and Security Agreement and Truth in Lending DisclosuresStandard – This version is used when a state specific version or right to cure version is not required.Right to Cure – This version is used when a state specific version is not required but a notice of the borrower’s right to cure in default is required.Florida – This version is used exclusively for lending in Florida when the lender does not want the transaction to be subject to the Florida Documentary Stamp Tax.Iowa – Iowa is a right to cure state and has state specific default language.Louisiana – Louisiana has state specific security agreement language.New Hampshire – New Hampshire law has state specific requirements for car loans which are included in this version.Virginia – This version is for Virginia credit unions due to Credit Insurance requirements.Wisconsin – Wisconsin has state specific default provisions and security agreement language.


Chapter 2

Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure

Document Description – Electronic format only

When Used: This document is used when a borrower has been approved for a closed-end pre-approved vehicle loan. The Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure must be used in conjunction with the Pre-Approved Express Draft (site draft or check).

Purpose: The Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure provides:

• The disclosures required by Regulation Z; and

• The contract terms between the credit union and the borrower(s).

All Truth in Lending disclosures are given in the “Fed Box” area and need to be completed based on the maximum amount permitted to be borrowed.

Document Numbers: NXX23* NRC23* NFL23* NIA23* NLA23* NNH23* NVA23* NWI23*

How Distributed: A copy of this document must be given to a borrower (if joint borrowers, only one needs to receive a copy).

Printed Components: Part 1 – Credit union copy of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure

Part 2 – Borrower copy of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure

Part 3 – Filing copy, if applicable. NOTE: When recording the Filing Copy, also include a copy of the Pre-Approved Express Draft as it contains the Borrower(s) signature(s).

State-Specific Versions: Standard, Right to Cure, Florida, Iowa, Louisiana, New Hampshire, Virginia, and Wisconsin versions are available.

*Indicates spaceholder for version number


Page 1 sample

LOAN TYPE

NXX232-e

The Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure sets forth the terms and conditions of the loan offered and extended byto the borrower(s) identified herein for the purchase of a new or used vehicle and is

comprised of the following documents: (i) a Truth in Lending Disclosure for each available Loan Type; and (ii) a Loan and Security Agreement.

NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)BORROWER 2BORROWER 1

NAME AND ADDRESS

PRE-APPROVED LOAN AND SECURITY AGREEMENT AND TRUTH IN LENDING DISCLOSURE

TRUTH IN LENDING DISCLOSURE

SEE YOUR LOAN AND SECURITY AGREEMENT FOR ANY ADDITIONAL INFORMATION ABOUT NONPAYMENT, DEFAULT, AND ANY REQUIREDREPAYMENT IN FULL BEFORE THE SCHEDULED DATE.

The amount of creditprovided to you or onyour behalf.

Amount Financed

$

Your Payment Schedule Will Be:

When Payments Are Due: Payments will be due beginning on the day of the month that first occurs days from fundinguntil the loan is repaid in full.

Number of Payments Amount of Payments$$

$

Security: Collateral securing other loans with the credit union may also secure this loan. You are giving a security interest in your shares and dividendsand, if any, your deposits and interest in the credit union; and the goods or property purchased with and described in the Pre-Approved Express Draft.

Property Insurance: You may obtain property insurance from anyone that is acceptable to the creditunion. If you get the insurance from us, you will pay $

Required Deposit: The Annual PercentageRate does not take into account yourrequired deposit, if any.

Prepayment: If you pay off early you will nothave to pay a penalty.

Total of PaymentsThe amount you will havepaid after you have madeall payments as scheduled.

Late Charge:$

Filing Fees$

Non-Filing Insurance

%

The dollar amount thecredit will cost you.

$

The cost of your credit as a yearlyrate.

FINANCE CHARGEANNUAL PERCENTAGE RATE

LOAN NUMBER EXPRESS DRAFT NUMBER GROUP POLICY NUMBERACCOUNT NUMBER

CUNA MUTUAL GROUP 2012 ALL RIGHTS RESERVED

ITEMIZATION OF THE AMOUNT FINANCED

$Itemization of Amount Financed of

$$ ToTo Approved and/or Independent Automobile Dealer $

ToTo$

Amounts Paid to Others on Your Behalf: (If an amount is marked with an asterisk (*) we will be retaining a portion of the amount.)$Prepaid Finance Charge

One or more additional Truth In Lending Disclosure(s) for other available Loan Types may be included on a following page and shall beincorporated as part of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.

( 'e' means an estimate)


DATE

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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)

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Page 1 instructions

Please refer to the document on the preceding page for the corresponding numbers.

1. Credit Union Information – This space is used to identify the credit union (creditor) 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. Credit Union Name – Enter the name of the credit union.

3. Date – Enter the date you prepared and delivered the document to the borrower(s).

4. Loan Number – Enter the loan identification number as defined by the credit union.

5. Express Draft Number – Enter an Express Draft Number assigned to this transaction. Typically credit unions will create a series of numbers to pull from so that no two Express Draft Numbers are ever the same.

The Express Draft Number that appears on the Pre-Approved Express Draft (Site Draft) needs to match the Express Draft Number that appears on the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and the Truth in Lending Disclosure (Pre-Approved), if used for this loan. The Express Draft Number will be used to track this and other documents that are part of this transaction in your Pre-Approved Draft Log as discussed earlier.

6. Account Number – Enter the borrower’s account number.

7. Group Policy Number – Enter your credit union’s CUNA Mutual Group Policy Number, often referred to as your “Contract Number”.

8. Borrower 1 Name and Address / Borrower 2 Name and Address – Enter the name and address of each borrower.

9. Loan Type – Enter the Loan Type that is represented by this Truth In Lending Disclosure.

A Loan Type is an offer that is specific as to the Annual Percentage Rate (APR), term, collateral requirements and any other characteristics of the offer that may differ from other offers.

Please refer to the FAQ section or the Sample Loans section for more details on Loan Type.


Page 1 instructions (continued)

Truth in Lending Disclosure SectionThe 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.”

Closed-end loans require use of the best information reasonably available at the time the disclosures are made.

Section 1026.17(c) of Regulation Z states the following:

1026.17(c) Basis of disclosures and use of estimates –

(1) The disclosures shall reflect the terms of the legal obligations between the parties;

(2)(i) If any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer and state clearly that the disclosure is an estimate.

For the Pre-Approved Vehicle Loan program, the “Amount Financed”, “Finance Charge”, “Total of Payments”, and “Amount of Payments” disclosures are all based upon the maximum approved loan amount and would all be estimates. “Filing Fees” may also be listed as an estimate if it is unclear what the final amount of those fees will be. You must place an “e” next to these estimated disclosures.

The Truth in Lending Disclosure contains the following items:

10. Annual Percentage Rate – Your credit union must complete the Annual Percentage Rate (APR) for the loan requested, pursuant to 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 pursuant to Appendix J to Part 1026. Examples of finance charges on consumer loans include among other things:

a. credit report fees; b. loan processing fees; c. residual value insurance (RVI); and d. mandatory GAP coverage.

11. Finance Charge (Labeled with an “e”) – Your credit union must complete the total finance charge for the loan as required by Regulation Z, Section 1026.18(d). See also Regulation Z, 1026.4.

Note: Any prepaid finance charge should be included in this amount (i.e. loan processing fee). However, given the unique aspects of this program, charging a prepaid finance charge could trigger re-disclosure requirements given the potential impact on APR pursuant to §1026.17(f). Contact the LOANLINER Department if you intend to offer a prepaid finance charge and have questions.

12. Amount Financed (Labeled with an “e”) – Regulation Z, Section 1026.18(b) requires that the amount financed be calculated in the following way:

a. The pre-approved principal loan amount.



b. Plus other amounts that are financed by the lender and are not part of the finance charge. Voluntary Payment Protection such as Level Rate and Monthly Renewable credit insurance and Debt Protection is not financed; therefore, the cost for this coverage should not be added to the Amount Financed. Single Premium insurance is financed and will be included in this amount.

c. Minus any prepaid finance charge.

13. Total of Payments (Labeled with an “e”) – Your credit union must include the sum of the payments for the loan, Regulation Z, Section 1026.18(h). The total of payments must equal the sum of the payments reflected in the payment schedule.

For example: If the payment schedule contemplates 36 payments of $100, the total of payments would show $3,600. The total of payments can include amounts that are not included in the finance charge or amount financed, such as Voluntary Payment Protection. The Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure should be completed with the total payments based on the pre-approved loan amount at the time the disclosure is prepared.

14. Filing Fees (Labeled with an “e” as applicable) – A filing fee is not considered a finance charge if the cost is itemized and disclosed, Regulation Z, Section 1026.4(e). However, any amount charged by your credit union that is in addition to the actual costs charged by the government agency processing the filing fee would be considered a finance charge, Commentary to Regulation Z, Section 1026.4(e). In addition, 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. If the filing fee may vary, disclose the maximum possible amount and label it with an “e” for estimate.

15. Non-Filing Insurance (Labeled with an “e” as applicable) – 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). If the non-filing insurance may vary, disclose the maximum possible amount and label it with an “e” for estimate.

16. Prepayment – Regulation Z, Section 1026.18(k) requires disclosure of any prepayment penalty. The language in the LOANLINER documents prohibits a prepayment penalty.

17. Required Deposit – Per Regulation Z, Section 1026.18(r), this language is required when the borrower must maintain a deposit as a condition of the loan.

18. Property Insurance – If your credit union sells property insurance, you must 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).

19. Late Charge – The late charge is any dollar or percentage charge that may be imposed before maturity due to a late payment. This language must be provided by the credit union and may be printed on the documents per Regulation Z, Section 1026.18(l).



20. Payment Schedule – Enter the number and amount(s), of the payments per Regulation Z, Section 1026.18(g). Label the amount of the payments with an “e” for estimate. If Voluntary Payment Protection is elected, the premium or program fee should be included in the payment amount.

When payments are due: Because you are not able to determine exactly when the first loan payment will be due, you are

not able to disclose an exact date for each payment on the Payment Schedule. Therefore you need to complete the following sentence:

“When Payments Are Due: Payments will be due _________ beginning on the ______day of the month that first occurs ________ days from funding until the loan is repaid in full.”

The first blank line is where you disclose the frequency of the payments, typically monthly.

The second blank line is where you disclose the day of the month on which the payments will be due, such as the 1st or the 15th.

The third blank line is minimum number of days from the date of funding until the first payment will be due, example 30 days.

EXAMPLE LANGUAGE 1:

“When Payments Are Due: Payments will be due MONTHLY beginning on the 15th day of the month that first occurs 30 days from funding until the loan is repaid in full.”

Given this language, if the loan is funded on May 14th, the first payment will not be due until June 15th. However, if the loan is funded on May 17th, the first payment will not be due until July 15th. In the May 17th scenario, the first payment is not due on June 15th, as that date is less than 30 days after May 17th.

EXAMPLE LANGUAGE 2:


Given this language, if the loan is funded on May 14th, the first payment will not be due until June 15th. If the loan is funded on May 17th, the first payment will not be due until June 15th as well. In this May 17th scenario, the first payment is due on June 15th, as that date is more than 14 days after May 17th.

21. Security – The statement “Collateral securing other loans with the credit union may also secure this loan” must be disclosed as it supports the cross-collateral clause found in the Loan and 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” discloses that the member’s shares/deposits will also be used to secure the loan. The actual Property being purchased and offered as security is described in the Pre-Approved Express Draft.

22. 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.



Itemization of Amount Financed Section23. Itemization of Amount Financed – Enter the amount that will be financed by the borrower per

Regulation Z, Section 1026.18(c). This is the amount shown in the “Amount Financed” disclosure.

24. 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 principal loan amount and added to the finance charge for disclosure purposes. This will result in an APR that is different than the contractual interest rate.

25. 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.” Since the Pre-Approved Vehicle Loan program is designed with the option to only allow purchase of a vehicle from an Approved and/or Independent Automobile Dealer, this phrase has been pre-filled into the first line. This amount is typically calculated by taking the pre-approved amount and subtracting out the estimated cost of any GAP, MRC, filing fees, and any other Third Party Fees not paid to the Dealer.

NOTE: Voluntary Payment Protection 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, but the credit union charges the borrower $400. The $100 difference is an “upcharge” on this product. The credit union needs to disclose that it is retaining a portion of the $400 that is being charged to the borrower.

26. Truth in Lending Disclosure – This statement refers to a standalone Truth in Lending Disclosure in the event an additional Loan Type is offered to the member.


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Borrower(s)Credit Union Loan No. Acct. No.

LOAN AND SECURITY AGREEMENT

4. PAYMENTS - You promise to make regular payments of principal and interest in accordance with the payment schedule set forth onthe Pre-Approved Express Draft Confirmation Receipt (the "Confirmation") you will receive shortly after your purchase. Youacknowledge and agree that the amount of the payments and the due dates of such payments may vary from those disclosed in theDisclosure Statement depending on the amount and date of the Loan. You may prepay any amount without penalty at any time. If youprepay any part of what you owe, you are still required to make the regularly scheduled payments, unless we have agreed to a change inthe payment schedule. Because this is a simple interest loan, if you do not make payments when due, your final payment may be moreor less than the amount of the final payment disclosed to you. If you elect voluntary payment protection, we will either include thepremium or program fees in your payments or extend the term of your Loan. If the term is extended, you will be required to makeadditional payments of the scheduled amount, until what you owe has been paid. You promise to make all payments in a manner and at alocation acceptable to us. Unless otherwise required by law, payments will be applied to amounts owed in the manner we choose.5. LATE CHARGE - If you are late in making a payment, you promise to pay the late charge shown in the Disclosure Statement. If no latecharge is disclosed on the Disclosure Statement, none will be charged.6. SECURITY AGREEMENT.

a. THE SECURITY FOR THE LOAN - You give us a security interest in the property described in the Security Offered section of theExpress Draft ("Property"). The security interest you give includes all accessions (things that are attached to or installed in theProperty now or in the future). The security interest also includes any replacements for the Property which you buy within 10 daysof the Loan and any extensions, renewals or refinancings of the Loan. It also includes any money you receive from selling theProperty or from insurance you have on the Property. If the value of the Property declines, you agree to give us more property assecurity if asked to do so.In addition to the Property, property securing other loans you have with us also secures this Loan, unless the property is a principaldwelling. In addition to your pledge of shares, we may also have what is known as a statutory lien on all individual and jointaccounts you have with us. A statutory lien means we have the right under federal law and many state laws to claim an interest inyour accounts. We can enforce a statutory lien against your shares and dividends, and if any, interest and deposits, in all individualand joint accounts you have with us to satisfy any outstanding financial obligation that is due and payable to us. We may exerciseour right to enforce this lien without further notice to you, to the extent permitted by law. For all borrowers: You pledge as securityfor this Loan all shares and dividends and, if any, all deposits and interest in all joint and individual accounts you have with theCredit 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 whatyou owe when you are in default. The statutory lien and your pledge do not apply to any Individual Retirement Account or any otheraccount that would lose special tax treatment under state or federal law if given as security.

b. WHAT THE SECURITY INTEREST COVERS/CROSS COLLATERAL PROVISIONS - Our security interest described in section 6.a. ofthis Agreement secures the Loan and any extensions, renewals, modifications or refinancings of the Loan. The security interest alsosecures any other loans, including any credit card loan, you have now or receive in the future from us and any other amounts youowe us for any reason now or in the future, except any loan secured by your principal dwelling.

c. OWNERSHIP OF THE PROPERTY - You promise that you own the Property or, if this Loan is to buy the Property, you promise youwill use the Loan proceeds solely for that purpose. You promise that no one else has any interest in or claim against the Propertythat 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 anothercreditor until the Loan is repaid. You promise you will allow no other security interest or lien to attach to the Property either by youractions or by operation of law.

d. PROTECTING THE SECURITY INTEREST - If your state issues a title for the Property, you promise to have our security interestshown on the title. We may have to file what is called a financing statement or some other document or instrument to protect oursecurity interest from the claims of others. You irrevocably authorize us to execute (on your behalf and in a form satisfactory to us),if applicable, and file one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code(UCC) or any other document or instrument pursuant to applicable state law. You promise to do whatever else we think isnecessary to protect our security interest in the Property. You also promise to pay all costs, including but not limited to any attorneyfees, we incur in protecting our security interest and rights in the Property, to the extent permitted by applicable law.

e. USE OF PROPERTY - Until the Loan has been paid off, you promise you will: (1) use the Property carefully and keep it in workingorder and in good repair; (2) obtain our written permission before making major changes to the Property or changing the addresswhere the Property is kept; (3) inform us in writing before changing your address; (4) allow us to inspect the Property; (5) promptlynotify us if the Property is damaged, stolen or abused; (6) not use the Property for any unlawful purpose; and (7) not retitle theProperty in another state without telling us.

NXX232-eCUNA MUTUAL GROUP 2012 ALL RIGHTS RESERVED

In this Loan and Security Agreement ("Agreement"), all references to "Credit Union," "we," "our," or "us," mean the Credit Union whosename appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you," "your," or"borrower" mean each person who signs the Pre-Approved Express Draft ("Express Draft") as a borrower. All references to the"Disclosure Statement" shall refer to the Truth in Lending Disclosure(s) provided as part of the Pre-Approved Loan and SecurityAgreement and Truth in Lending Disclosure. All references to "Loan" shall mean, the amount actually borrowed pursuant to thisAgreement, including without limitation any fees financed with the proceeds thereof. By signing the Express Draft (which is incorporatedherein by reference) you acknowledge that you have received and read in full the Pre-Approved Loan and Security Agreement and Truth inLending Disclosure and the Express Draft and agree to the terms, obligations and conditions set forth in this Agreement and the ExpressDraft.1. SELECTION OF LOAN TYPE - You acknowledge and agree that we have provided a Disclosure Statement setting forth the estimatedterms of each Loan Type being offered to you by the Credit Union. The Loan Type is specified on the Disclosure Statement(s) provided inconnection herewith. You agree to fill-in the Loan Type you have selected on the Express Draft in accordance with the instructions setforth therein. You further acknowledge and agree that the terms of the Loan will correspond to the terms of the Loan Type you selectbut that certain terms may vary depending on the actual amount and date of the Loan.2. PROMISE TO PAY - You promise to pay to the Credit Union the principal amount of the Loan plus interest on the unpaid balance untilthe entire outstanding balance plus interest has been repaid. The interest rate(s) applicable to each available Loan Type are set forthbelow. Interest will begin to accrue on the date we pay the Express Draft. The principal amount of the Loan will be the amount enteredon the Express Draft plus any fees that you finance with the proceeds of the Loan.Loan Type: For fixed rate loans the interest rate is % per year.Loan Type: For fixed rate loans the interest rate is % per year.3. COLLECTION COSTS - 29

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Loan and Security Agreement Section27. Selection of Loan Type – This paragraph allows you to offer more than one Loan Type (standard

documents allow a maximum of two) by requiring that the borrower properly complete the Pre-Approved Express Draft with the name of the Loan Type they have selected. It also captures their acknowledgement to the fact they were provided a Truth in Lending Disclosure for each Loan Type.

28. Promise to Pay – This is the contractual promise to repay the principal loan amount plus interest. Your credit union must insert each Loan Type offered and corresponding interest rate as disclosed in the Truth In Lending Disclosure(s). If only offering one Loan Type, place “N/A” in the second line.

29. Collection Costs – Any collection costs your credit union wants to impose that are permissible under state law must be disclosed here. This language may be imprinted. This may be the same language that is used for other closed-end loans.

30. Payments – This is the borrower’s promise to make payments as specified in the Pre-Approved Express Draft Confirmation Receipt. It 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 otherwise the loan term will be extended.

31. Late Charge – This describes that if your borrower is late in making a payment, they promise to pay the late charge shown in the Truth in Lending Disclosure that corresponds to the Loan Type they have selected, if a late charge is disclosed.

32. Security Agreement –

a. The Security For the Loan – This paragraph grants your credit union a security interest in the property described on the Pre-Approved Express Draft. 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, among other things.

Regulation Z, Section 1026.18(m) requires that the creditor disclose the fact that it will acquire a security interest in the property purchased. Therefore this paragraph identifies that this loan is secured not only by the property described on the Pre-approved Express Draft, but also by property securing certain 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 the member’s shares and dividends in all individual and joint accounts with your credit union against the amount due and owing from the member to satisfy the obligation.

NOTE: For state chartered credit unions located in states where statutory liens are not allowed, however the general pledge of shares and dividends would apply



b. What the Security Interest Covers/Cross Collateral Provisions – This paragraph states that the security interest in the property described on the Pre-Approved Express Draft secures the Loan. It also states that the security for the loan will also be security for other debts with the credit union, now and in the future.

c. Ownership of the Property – This clause details the borrower’s promises as they relate to the ownership of the property. The borrower(s) promise that they own or will use the loan proceeds to purchase the collateral shown in the “Security Offered” Section of the Pre-Approved Express Draft. They further promise that they will not sell or lease the collateral or give anyone else a security interest in it until the debt has been paid, nor will they allow any other security interest or lien to be attached to the Property.

d. 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.

e. Use of Property – This paragraph outlines the responsibilities of the borrower to maintain the collateral.


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LOAN AND SECURITY AGREEMENT (continued)f. PROPERTY INSURANCE, TAXES AND FEES - You promise to pay all taxes and fees (e.g. registration fees) due on the Property. You

also promise to keep the Property insured against loss and damage in the amount and with the coverages we reasonably requirefrom an insurance company that is acceptable to us. You may provide the property insurance through a policy you already have, orthrough a policy you get and pay for. You promise to make the insurance policy payable to us and to deliver the policy or proof ofcoverage 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 theinsurance settlement to repair the Property or apply it towards what you owe in our sole discretion. You authorize us to endorse anydraft or check that 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 notrequired to do so. Any money we spend for taxes, fees or insurance will be added to the unpaid balance of the Loan and you willpay interest on those amounts at the same rate you agreed to pay on the Loan. We may receive payments in connection with theinsurance from a company which provides the insurance. We may monitor our loans for the purpose of determining whether you andother borrowers have complied with the insurance requirements of our loan agreements or may engage others to do so. Theinsurance charge added to the Loan may include (1) the insurance company's payments to us and (2) the cost of determiningcompliance with the insurance requirements. If we add amounts for taxes, fees or insurance to the unpaid balance of the Loan, wemay increase your payments to pay the amount added within the term of the insurance or term of the Loan.

g. INSURANCE NOTICE - If you do not purchase the required property insurance, the insurance we may purchase and charge you forwill cover only our interest in the Property. The premium for this insurance may be higher because the insurance company may havegiven us the right to purchase insurance after uninsured collateral is lost or damaged. The insurance will not include liabilityinsurance coverage and will not satisfy any state financial responsibility or no fault laws.

7. 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 itis due. You will be in default if you break any other promise you made under this Agreement. You will be in default if you die, file forbankruptcy, become insolvent (that is, unable to pay your bills and loans as they become due), or if you made any false or misleadingstatements in your loan application. You will also be in default if something happens that we believe may seriously affect your ability torepay what you owe under this Agreement or if you are in default under any other agreement you have with us. You will be in default ifany Property you have given us as security is repossessed by someone else, seized under a forfeiture or similar law, or if anything elsehappens that significantly affects the value of the Property or our security interest in it.8. ACTIONS AFTER DEFAULT - When you are in default, we may demand immediate payment of the entire unpaid balance of the Loan.You waive any right you have to receive demand for payment, notice of intent to demand immediate payment and notice of demand forimmediate payment. If we demand immediate payment, you will continue to pay interest at the rate provided for in this Agreement, untilwhat you owe has been fully repaid. We will also apply against what you owe any shares and/or deposits given as security under thisAgreement. We may also exercise any other rights given by law when you are in default.When you are in default, we may also take possession of the Property. You agree the Credit Union has the right to take possession ofthe Property without judicial process if this can be done without breach of the peace. If we ask, you promise to deliver the Property at atime and place we choose. You agree that we may obtain a key or other device necessary to unlock and operate the Property when youare in default. We will not be responsible for any other property not covered by this Agreement that you leave inside the Property or thatis 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 ofany public disposition or the date after which a private disposition will be held. Our expenses for taking possession of and selling theProperty will be deducted from the money received from the sale. Those costs may include the cost of storing the Property, preparing itfor sale and attorneys 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 unpaidbalance 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 Loanuntil that amount has been paid.9. EACH PERSON RESPONSIBLE - Each person who signs the Express Draft as a borrower will be individually and jointly responsible forpaying the entire amount owed under this Agreement. This means we can enforce our rights against any one of you individually oragainst all of you together.10. DELAY IN ENFORCING RIGHTS - We can delay enforcing any of our rights under this Agreement any number of times without losingthe ability to exercise our rights later. We can enforce this Agreement against your heirs or legal representatives.11. CONTINUED EFFECTIVENESS - If any term of this Agreement is determined by a court to be unenforceable, the other terms willremain in full force and effect.12. 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 benotice to all.13. USE OF LOAN - You promise to use your Loan for consumer (personal, family or household) purposes, unless the Credit Union givesyou written permission to use the Loan also for agricultural or commercial purposes.14. NO ORAL AGREEMENTS - THIS AGREEMENT CONSTITUTES A "WRITTEN LOAN AGREEMENT" PURSUANT TO SECTION 26.02 OFTHE TEXAS BUSINESS AND COMMERCE CODE, IF SUCH SECTION APPLIES. THIS WRITTEN AGREEMENT REPRESENTS THE FINALAGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, ORSUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.15. NOTICE TO NORTH DAKOTA BORROWERS PURCHASING A MOTOR VEHICLE - THE MOTOR VEHICLE IN THIS TRANSACTIONMAY BE SUBJECT TO REPOSSESSION. IF IT IS REPOSSESSED AND SOLD TO SOMEONE ELSE, AND ALL AMOUNTS DUE TO THESECURED PARTY ARE NOT RECEIVED IN THAT SALE, YOU MAY HAVE TO PAY THE DIFFERENCE.16. NOTICE FOR ARIZONA OWNERS OF PROPERTY - It is unlawful for you to fail to return a motor vehicle that is subject to a securityinterest, within thirty days after you have received notice of default. The notice will be mailed to the address you gave us. It is yourresponsibility to notify us if your address changes. The maximum penalty for unlawful failure to return a motor vehicle is one year inprison and/or a fine of $150,000.00.17. NOTICE: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THEDEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDSHEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.18. OTHER PROVISIONS -


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32. Security Agreement (con’t) –

f. 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.

g. 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.

There is also a general pledge of the member’s 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 Individual Retirement Accounts 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.

33. Default – This paragraph describes the events that will result in default. Be sure to read this paragraph to determine whether a loan may be deemed to be in default. If you have questions, consult your legal counsel.

34. Actions After Default – This section includes a statement allowing the credit union to accelerate the unpaid balance of the loan in the event of default. When a debt is accelerated, interest will continue to accrue on the unpaid balance at the same rate. Lastly, this section allows your credit union to exercise any other rights given by law when your borrower is in default.

35. Each Person Responsible – This paragraph explains that each borrower who signs the Pre-Approved Express Draft will be held individually and jointly responsible for paying the entire amount owed under the Agreement.

36. Delay in Enforcing Rights – This statement provides that your credit union can delay enforcing any rights under the Agreement without losing the ability to exercise those rights later. It also permits your credit union to enforce the Agreement against a borrower’s heirs or legal representatives.

37. Continued Effectiveness – This statement provides that if a court finds any part of the Agreement unenforceable, that the remainder of the Agreement will remain in effect.

38. 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.

39. Use of Loan – This paragraph was added to the Agreement due to the 2005 Bankruptcy reform which provides certain protections against cramdown with respect to purchase money security interests acquired for personal, family or household purposes. This provision will prove that the vehicle was purchased by the borrower for consumer purposes.



40. No Oral Agreements – This paragraph confirms for Texas transactions that the rights and obligations of the borrower and the credit union shall be determined solely from the written Loan Agreement and any prior oral agreements between the credit union and the borrower are superseded by the Loan Agreement.

41. 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 and provides for amounts that may still be due after repossession and sale of the vehicle.

42. Notice for Arizona Owners of Property – This paragraph describes responsibilities for Arizona owners of property when in default on a motor vehicle.

43. Consumers’ Claims and Defenses Notice – The Consumers’ Claims and Defenses Notice is required when the credit union has a business relationship with the seller of goods. Given the nature of the Pre-Approved Vehicle Loan program, the credit union will have, at the very least, an indirect business relationship with the Dealer. Thus the Consumers’ Claims and Defenses Notice will apply.

44. Other Provisions – This section allows your credit union some flexibility by adding special provisions such as mandatory VSI coverage or default rate language.


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In this Loan and Security Agreement ("Agreement"), all references to "Credit Union," "we," "our," or "us," mean the Credit Union whose name appearsabove and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you," "your," or "borrower" mean each person whosigns the Pre-Approved Express Draft ("Express Draft") as a borrower. All references to the "Disclosure Statement" shall refer to the Truth in LendingDisclosure(s) provided as part of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure. All references to "Loan" shall mean,the amount actually borrowed pursuant to this Agreement, including without limitation any fees financed with the proceeds thereof. By signing theExpress Draft (which is incorporated herein by reference) you acknowledge that you have received and read in full the Pre-Approved Loan and SecurityAgreement and Truth in Lending Disclosure and the Express Draft and agree to the terms, obligations and conditions set forth in this Agreement and theExpress Draft.1. SELECTION OF LOAN TYPE - You acknowledge and agree that we have provided a Disclosure Statement setting forth the estimated terms of eachLoan Type being offered to you by the Credit Union. The Loan Type is specified on the Disclosure Statement(s) provided in connection herewith. Youagree to fill-in the Loan Type you have selected on the Express Draft in accordance with the instructions set forth therein. You further acknowledge andagree that the terms of the Loan will correspond to the terms of the Loan Type you select but that certain terms may vary depending on the actualamount and date of the Loan.2. PROMISE TO PAY - You promise to pay to the Credit Union the principal amount of the Loan plus interest on the unpaid balance until the entireoutstanding balance plus interest has been repaid. The interest rate(s) applicable to each available Loan Type are set forth below. Interest will begin toaccrue on the date we pay the Express Draft. The principal amount of the Loan will be the amount entered on the Express Draft plus any fees that youfinance with the proceeds of the Loan.Loan Type: For fixed rate loans the interest rate is % per year.Loan Type: For fixed rate loans the interest rate is % per year.3. COLLECTION COSTS -

4. PAYMENTS - You promise to make regular payments of principal and interest in accordance with the payment schedule set forth on the Pre-ApprovedExpress Draft Confirmation Receipt (the "Confirmation") you will receive shortly after your purchase. You acknowledge and agree that the amount ofthe payments and the due dates of such payments may vary from those disclosed in the Disclosure Statement depending on the amount and date of theLoan. You may prepay any amount without penalty at any time. If you prepay any part of what you owe, you are still required to make the regularlyscheduled payments, unless we have agreed to a change in the payment schedule. Because this is a simple interest loan, if you do not make paymentswhen due, your final payment may be more or less than the amount of the final payment disclosed to you. If you elect voluntary payment protection, wewill either include the premium or program fees in your payments or extend the term of your Loan. If the term is extended, you will be required to makeadditional payments of the scheduled amount, until what you owe has been paid. You promise to make all payments in a manner and at a locationacceptable to us. Unless otherwise required by law, payments will be applied to amounts owed in the manner we choose.5. LATE CHARGE - If you are late in making a payment, you promise to pay the late charge shown in the Disclosure Statement. If no late charge isdisclosed on the Disclosure Statement, none will be charged.6. SECURITY AGREEMENT.

a. THE SECURITY FOR THE LOAN - You give us a security interest in the property described in the Security Offered section of the Express Draft("Property"). The security interest you give includes all accessions (things that 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 orrefinancings of the Loan. It also includes any money you receive from selling the Property or from insurance you have on the Property. If the valueof the Property declines, you agree to give us more property as security if asked to do so.In addition to the Property, property securing other loans you have with us also secures this Loan, unless the property is a principal dwelling. Inaddition 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. Astatutory lien means we have the right under federal law and many state laws to claim an interest in your accounts. We can enforce a statutorylien against your shares and dividends, and if any, interest and deposits, in all individual and joint accounts you have with us to satisfy anyoutstanding financial obligation that is due and payable to us. We may exercise our right to enforce this lien without further notice to you, to theextent 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 alljoint 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 thefunds 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 RetirementAccount or any other account that would lose special tax treatment under state or federal law if given as security.



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NAME AND ADDRESS

b. WHAT THE SECURITY INTEREST COVERS/CROSS COLLATERAL PROVISIONS - Our security interest described in section 6.a. of this Agreementsecures the Loan and any extensions, renewals, modifications 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 thefuture, except any loan secured by your principal dwelling.

c. 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 Loanproceeds solely for that purpose. You promise that no one else has any interest in or claim against the Property that you have not already told usabout. 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 promiseyou will allow no other security interest or lien to attach to the Property either by your actions or by operation of law.

d. 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 or some other document or instrument to protect our security interest from the claims ofothers. You irrevocably authorize us to execute (on your behalf and in a form satisfactory to us), if applicable, and file one or more financing,continuation or amendment statements pursuant to the Uniform Commercial Code (UCC) or any other document or instrument pursuant toapplicable state law. You promise to do whatever else we think is necessary to protect our security interest in the Property. You also promise topay all costs, including but not limited to any attorney fees, we incur in protecting our security interest and rights in the Property, to the extentpermitted by applicable law.

e. USE OF PROPERTY - Until the Loan has been paid off, you promise you will: (1) use the Property carefully and keep it in working order and in goodrepair; (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 orabused; (6) not use the Property for any unlawful purpose; and (7) not retitle the Property in another state without telling us.

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FILING COPY


Page 4 instructions

Filing Copy of Loan and Security Agreement

This Filing Copy of the Loan and Security Agreement is provided for credit unions that need to send in a copy of the Loan and Security Agreement when filing their lien. When submitting the Filing Copy to a government agency for lien recording, also include a copy of the Pre-Approved Express Draft as it contains the Borrower(s) signature(s).

45. Credit Union Name and Address – Ensure that your credit union’s name and address print into this section.

46. Date – Enter the date you prepared and delivered the document to the borrower(s).



49. Security Offered – Enter all vehicle information including Year, Make, Model, Type and VIN. Be certain to verify the accuracy of the VIN number.

50. Lien Amount For Colorado Filing Copy ONLY – Enter dollar amount of lien.

51. Promise to Pay – This is the contractual promise to repay the principal loan amount plus interest. Your credit union must insert each Loan Type offered and corresponding interest rate as disclosed in the Truth In Lending Disclosure(s). If only offering one Loan Type, place “N/A” in second line.

52. Collection Costs – Any collection costs your credit union wants to impose that are permissible under state law must be disclosed here. This language may be imprinted. This may be the same language that is used for other closed-end loans.


Chapter 3

Truth in Lending Disclosure (Pre-Approved)


When Used: This document is used when a second Loan Type is offered to the borrower under the Closed-End Pre-Approved Vehicle Loan Program.

Purpose: The Truth in Lending Disclosure provides the disclosures required by Regulation Z.

Document Numbers: NXX33* NFL33* NVA33*

How Distributed: A copy of this document must be given to a borrower (if joint borrowers, only one needs to receive a copy).

Printed Components: Part 1 – Credit Union copy of the Truth in Lending Disclosure (Pre-Approved)

Part 2 – Borrower copy of the Truth in Lending Disclosure (Pre-Approved)

State-Specific Versions: Standard, Florida and Virginia



Page 1 sample

NXX332-e

TRUTH IN LENDING DISCLOSURE(Pre-Approved)



NAME AND ADDRESS




Amount Financed

$ $






Late Charge:$

Filing Fees$


%


$



LOAN NUMBERDATE GROUP POLICY NUMBERACCOUNT NUMBER

LOAN TYPE

('e' means an estimate)

EXPRESS DRAFT NUMBER




This document shall be incorporated as part of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.


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Page 1 instructions



2. Date – Enter the date you prepared and provided the document to the borrower(s).


4. Express Draft Number – Enter an Express Draft Number assigned to this transaction. Typically credit unions will create a series of numbers to pull from so that no two Express Draft Numbers are ever the same.

The Express Draft Number that appears on the Pre-Approved Express Draft (Site Draft) needs to match the Express Draft Number that appears on the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and the Truth in Lending Disclosure (Pre-Approved), if used for this loan. The Express Draft Number will be used to track this and other documents that are part of this transaction in your Pre-Approved Express Draft Log as discussed earlier.


6. Group Policy Number – Enter your credit union’s CUNA Mutual Group policy number, often referred to as your “contract number.


8. Loan Type – Enter the Loan Type that is represented by this Truth In Lending Disclosure.

A Loan Type is an offer that is specific as to the Annual Percentage Rate (APR), term, collateral requirements and any other characteristics of the offer that may differ from other offers.

Please refer to the FAQ section or the Sample Loans section for more details on Loan Type.



Truth in Lending Disclosure SectionThe 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.”

Closed-end loans require use of the best information reasonably available at the time the disclosures are made.

Section 1026.17(c) of Regulation Z states the following:

1026.17(c) Basis of disclosures and use of estimates –

(1) The disclosures shall reflect the terms of the legal obligations between the parties;

(2)(i) If any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available at the time the disclosure is provided to the consumer and state clearly that the disclosure is an estimate.

For the Pre-Approved Vehicle Loan program, the “Amount Financed”, “Finance Charge”, “Total of Payments”, and “Amount of Payments” disclosures are all based upon the maximum approved loan amount and would all be estimates. “Filing Fees” may also be listed as an estimate if it is unclear what the final amount of those fees will be. You must place an “e” next to these estimated disclosures.

The Truth in Lending Disclosure contains the following items:

9. Annual Percentage Rate – Your credit union must complete the Annual Percentage Rate (APR) for the loan requested, pursuant to 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 pursuant to Appendix J to Part 1026. Examples of finance charges on consumer loans include among other things:

a. credit report fees; b. loan processing fees; c. residual value insurance (RVI); and d. mandatory GAP coverage.

10. Finance Charge (Labeled with an “e”) – Your credit union must complete the total finance charge for the loan as required by Regulation Z, Section 1026.18(d). Also see Regulation Z, Section 1026.4.

Note: Any prepaid finance charge should be included in this amount (i.e. the Loan Fee). However, given the unique aspects of this program, charging a prepaid finance charge could trigger re-disclosure requirements given the potential impact on APR pursuant to §1026.17(f). Contact the LOANLINER Department if you intend to offer a prepaid finance charge and have questions.



11. Amount Financed (Labeled with an “e”) – Regulation Z, Section 1026.18(b) requires that the amount financed be calculated in the following way:

a. The pre-approved principal loan amount.

b. Plus other amounts that are financed by the lender and are not part of the finance charge. Voluntary Payment Protection such as Level Rate and Monthly Renewable Credit Insurance and Debt Protection, is not financed; therefore, the cost for this coverage should not be added to the Amount Financed. Single premium insurance is financed and will be included in this amount.


12. Total of Payments (Labeled with an “e”) – Your credit union must include the sum of the payments for the loan, Regulation Z, Section 1026.18(h). The total of payments must equal the sum of the payments reflected in the payment schedule.

For example: If the payment schedule contemplates 36 payments of $100, the total of payments would show $3,600. The total of payments can include amounts that are not included in the finance charge or amount financed, such as Voluntary Payment Protection. The Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure should be completed with the total payments based on the pre-approved loan amount at the time the disclosure is prepared.

13. Filing Fees (Labeled with an “e” as applicable) – A filing fee is not considered a finance charge if the cost is itemized and disclosed, Regulation Z, Section 1026.4(e). However, any amount charged by your credit union that is in addition to the actual costs charged by the government agency processing the filing fee would be considered a finance charge, Commentary to Regulation Z, Section 1026.4(e). In addition, 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. If the filing fee may vary, disclose the maximum possible amount and label with an “e” for estimate.

14. Non-Filing Insurance (Labeled with an “e” as applicable) – 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). If the non-filing insurance may vary, disclose the maximum possible amount and label it with an “e” for estimate.

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), 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, you must 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).

18. Late Charge – The late charge is any dollar or percentage charge that may be imposed before maturity due to a late payment. This language must be provided by the credit union and may be printed on the documents per Regulation Z, Section 1026.18(l).



19. Payment Schedule – Enter the number and amount(s), of the payments per Regulation Z, Section 1026.18(g). Label the amount of the payments with an “e” for estimate. If Voluntary Payment Protection is elected, the premium or the program fee should be included in the payment amount.

When payments are due:

Because you are not able to determine exactly when the first loan payment will be due, you are not able to disclose an exact date for each payment on the Payment Schedule.Therefore you need to complete the following sentence:

“When Payments Are Due: Payments will be due ___________ beginning on the __________day of the month that first occurs ________days from funding until the loan is repaid in full.”

The first blank line is where you disclose the frequency of the payments, typically monthly.

The second blank line is where you disclose the day of the month on which the payments will be due, such as the 1st or the 15th.

The third blank line is minimum number of days from the date of funding until the first payment will be due, example 30 days.

EXAMPLE LANGUAGE 1:


Given this language, if the loan is funded on May 14th, the first payment will not be due until June 15th. However, if the loan is funded on May 17th, the first payment will not be due until July 15th. In the May 17th scenario, the first payment is not due on June 15th, as that date is less than 30 days after May 17th.

EXAMPLE LANGUAGE 2:


Given this language, if the loan is funded on May 14th, the first payment will not be due until June 15th. If the loan is funded on May 17th, the first payment will not be due until June 15th as well. In this May 17th scenario, the first payment is due on June 15th, as that date is more than 14 days after May 17th.

20. Security – The statement “Collateral securing other loans with the credit union may also secure this loan” must be disclosed as it supports the cross-collateral clause found in the Loan and 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” discloses that the member’s shares/deposits will also be used to secure the loan. The actual Property being purchased and offered as security is described in the Pre-Approved Express Draft.



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 and prepayment penalties and rebates.

22. Cross-Reference Statement – This statement ties this Truth in Lending Disclosure to the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.


Chapter 4

Pre-Approved Express Draft (Site Draft)


When Used: This document is used after a borrower has been approved for a Pre-Approved Vehicle Loan and the Pre-Approved Loan and Security and Truth in Lending Disclosure has been completed. The Pre-Approved Express Draft (Site Draft) must be used in conjunction with other required Pre-Approved Vehicle Loan documents.

Purpose: This document allows you to pre-approve borrowers who want to shop for/purchase a vehicle. The borrower(s) take the Pre-Approved Express Draft (Site Draft) to the dealership so that once the borrower(s) and Dealer have negotiated a vehicle purchase, the borrower(s) and Dealer can complete and sign the Pre-Approved Express Draft (Site Draft), consummating the loan. The vehicle Dealer must present the Pre-Approved Express Draft (Site Draft) to you for payment rather than deposit it directly at their financial institution. If you want the Dealer to be able to directly deposit a “check”, the LOANLINER NXX93* (including Check Stock) may better suit your needs.

Document Numbers: NXX73* NFL73*

How Distributed: Distribution by Credit Union to Borrower(s) at time of Preapproval: This document must be given to:

The borrower(s).

Distribution by Dealer to Credit Union after document completion: Once the borrower(s) and the Dealer have completed and signed the

Pre-Approved Express Draft (Site Draft), the Dealer needs to make a copy of the completed original for themselves. The original should be submitted by the Dealer to the credit union along with any information detailed in the “Instructions to the Dealer” so that the Dealer can receive payment.

Distribution by Credit Union to Borrower(s) at time of Loan Completion: Once the credit union has finalized the loan transaction, a copy of

the completed Pre-Approved Express Draft marked “Copy” must be sent to the borrower(s) along with the Pre-Approved Express Draft Confirmation Receipt.

State-Specific Versions: Florida



Page 1 sample

NXX731-e

will Pay to:DealerCredit Union

SIGNATURE OF AUTHORIZED REPRSENTATIVE OF DEALER -- By signing below, the Dealer represents that the above "Instructions to Dealer" havebeen satisfied and that all required documents have been properly completed and presented with the Express Draft.


INSTRUCTIONS -- TO BORROWER:

Dollars

Security Offered:

X

$

THIS PRE-APPROVED EXPRESS DRAFT WILL NOT BE PAID UNLESS ALL INFORMATION IS COMPLETE.

Amount in Words

The following terms and conditions govern the use of thisPre-Approved Express Draft ("Express Draft"). All references to"Credit Union," "we" or "us" mean the Credit Union whose nameappears above. All references to "you" mean each person who signsthe Express Draft as a borrower. All references to "Vehicle" meanthe property purchased with the Express Draft. All references to"Dealer" mean the licensed automobile dealer from which theVehicle will be purchased. All other capitalized terms used but nototherwise defined herein shall have the meanings set forth in theLoan and Security Agreement and Truth in Lending Disclosure("Loan and Security Agreement").PAYMENTS - After we pay the Express Draft, you will receive aConfirmation Receipt notifying you of the amount of your paymentsand when they are due.COMPLETION OF EXPRESS DRAFT - You and the Dealer agree tocomplete the Express Draft in accordance with the instructions setforth below.SECURITY QUALIFICATIONS - The Vehicle you purchase with theExpress Draft will secure the Loan pursuant to the terms of the Loanand Security Agreement. The Vehicle you purchase must meet therequirements in the "Vehicle Qualifications" section of the"Instructions to Dealer" below.

INSTRUCTIONS -- TO DEALER:

Amount in Numbers

NOTICE TO BORROWER: (a) DO NOT SIGN THIS PAPER BEFORE YOU HAVE READ IT OR IF IT CONTAINS ANY BLANKSPACES. (b) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN. (c) YOU HAVE THE RIGHTAT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THE LOAN AND YOU MAY BE ENTITLED TOA PARTIAL REFUND OF THE FINANCE CHARGE.

X

By signing the Pre-Approved Express Draft as a borrower, you agree to be bound by and acknowledge receipt of the terms andconditions of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and this Pre-Approved Express Draft, all ofwhich are incorporated herein by reference. You also grant us a security interest in the property described above pursuant to the termsof the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.

Loan Type: Date Issued: Void After: Approved Limit: $

Signature of Authorized Representative of Dealer Date

VINYear Make Model Type

PRE-APPROVED EXPRESS DRAFT (Site Draft)

1. If not already preprinted by the Credit Union, fill in the Loan Typeyou have selected. Your available Loan Types are:1)2)

2. Fill in the name of the Dealer from whom you are purchasing theVehicle on the "Pay To" line. If the Credit Union has providedyou with a list of approved automobile dealers, the Dealer mustbe included on such list.

3. Fill in the purchase price of the Vehicle (not to exceed the"Approved Limit" amount) in numbers on the "Amount InNumbers," line and in words on the "Amount In Words" line.

4. Fill in all of the descriptive information for the Vehicle in the"Security Offered" lines. THE VIN ON THE EXPRESS DRAFTMUST MATCH THE VIN OF THE VEHICLE PURCHASED.

5. Each borrower listed must sign and date the Express Draft on theappropriate lines. Be sure to sign just as your name is printed onthe Express Draft.

6. Give the completed Express Draft to the Dealer.

By accepting this Express Draft, the Dealer agrees to comply withthe instructions set forth below and confirms the conditions setforth below have been satisfied. The Dealer acknowledges andagrees that this Express Draft must be presented to the CreditUnion for payment.1. APPROVED LIMIT - The amount of the Express Draft does not

exceed the "Approved Limit" indicated on the Express Draft andmeets the following requirements:

2. VEHICLE QUALIFICATIONS - The Vehicle meets the followingrequirements:

3. DELIVERY OF DOCUMENTATION - The Dealer will deliver acopy of the following to the Credit Union by fax (or othermeans acceptable to the Credit Union) within a commerciallyreasonable time to receive payment: (a) a copy of the purchaseagreement for the Vehicle signed by each borrower and anauthorized representative of the Dealer; (b) a copy of the fullyexecuted Express Draft; (c) the NADA value or MSRP stickerrelated to the Vehicle; and (d) a copy of the application for title.Fax to:

4. LIEN RECORDING - The necessary document and fees havebeen delivered to the appropriate state agency to perfect thelien of the Credit Union as a valid, first priority purchase moneysecurity interest in the Vehicle and there are no other securityinterests in the Vehicle. The following is the lienholderinformation to be used by the Dealer:

5. EXPRESS DRAFT COMPLETED - All "Instructions to Borrower"and "Instructions to Dealer" have been complied with and anauthorized representative of the Dealer and each borrowerwhose name is printed on the Express Draft have signed theExpress Draft.

After you have agreed with the Dealer on the details of your Vehiclepurchase, you must complete the Express Draft in accordance withthe following instructions:

SIGNATURES

BORROWER 2 DATEBORROWER 1

Type or Print Name of Authorized Representative of Dealer Phone Number

DATE

X

Express Draft Number:

Account Number:Borrower 1 Name and Address: Borrower 2 Name and Address:Credit Union Contact: Telephone:


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Page 1 instructions



2. Express Draft Number – Enter an Express Draft Number assigned to this transaction. Typically Credit Unions will create a series of numbers to pull from so that no two Express Draft Numbers are ever the same.

The Express Draft Number that appears on the Pre-Approved Express Draft (Site Draft) needs to match the Express Draft Number that appears on the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and the Truth in Lending Disclosure (Pre-Approved), if used for this loan. The Express Draft Number will be used to track this and other documents that are part of this transaction in your Pre-Approved Draft Log as discussed earlier.

3. Credit Union Contact – Enter the name of the person or department that the Dealer or the borrower(s) should contact at the credit union if they have any questions.

4. Telephone – Enter the telephone number of the credit union contact.

5. Borrower Information – Enter the borrower’s name, address and account number.

6. Loan Type – Enter the Loan Type(s) available to the borrower. If only offering one Loan Type, place “N/A” in second line.

7. Approved Limit – If you have any special requirements related to the limit, insert those requirements in the blank area here. An example would be:

“The amount of the Pre-Approved Express Draft cannot exceed _____% of the purchase price on a new vehicle or _____% of NADA retail price on used vehicles.”

You might also consider including information that tells the borrower what can be included in the total amount for which the Pre-Approved Express Draft is written. For example,

“The total of the vehicle purchase price, taxes, fees, and other charges cannot exceed the Approved Limit.”

8. Vehicle Qualifications – If you want to impose limitations on the type of vehicle that may be purchased, insert the limitations in the blank area here. For example:

“Valid on current to 4 year old models only” or “No salvaged vehicles.”

9. Fax To – Enter the fax number the Dealer may use to send all required documents back to the credit union.

10. Lien Recording – Enter the lienholder information (i.e. address, Electronic Lien Title (ELT) Code, etc.)

11. Loan Type – The borrower or Dealer should enter the Loan Type for the vehicle being purchased. If you are only offering the borrower(s) one Loan Type, it is a best practice to preprint the Loan Type before the Pre-Approved Express Draft is given to the borrower(s).

12. Date Issued – Enter the date you issue the Pre-Approved Express Draft to the borrower.



13. Void After – Enter the date after which the Pre-Approved Express Draft can no longer be used.

14. Approved Limit – Enter the maximum amount the borrower can use to purchase the vehicle. This amount may be lower than the “Amount Financed” on the Truth in Lending Disclosure if the borrower wishes to finance the cost of GAP and/or MRC. Remind the borrower that this amount needs to include the price of the vehicle, taxes, title fee and any other charges that may be included in the total purchase or any special requirements as listed in Approved Limit area.

15. Credit Union – Enter your credit union name in this space.

16. Dealer – Borrower or Dealer would enter the name of the Authorized Vehicle Dealer (the business’s name) that the vehicle is being purchased from. If you know the name of the Dealer the vehicle will be purchased from or wish to limit the borrower to purchasing a vehicle from a particular Dealer, it is a best practice to preprint the Dealer’s name before the Pre-Approved Express Draft is given to the borrower(s).

17. Amount in Numbers – Borrower or Dealer would enter the final purchase price of the vehicle being purchased in numbers. This is the amount paid to the Dealer and would include any extra amounts such as tax, title, license, etc.

18. Amount in Words – Borrower or Dealer would enter the final purchase price of the vehicle being purchased in words.

19. Security Offered – Borrower or Dealer should enter all vehicle information including Year, Make, Model, Type and VIN. Be certain to verify the accuracy of the VIN number.

20. Borrower(s) Signatures – Enter Borrower 1 Name and Borrower 2 Name (if applicable) in the space immediately below the signature boxes before presenting to the member.

Upon completion of the Pre-Approved Express Draft, the borrower will sign and date in the signature box provided. By signing as a borrower, they are agreeing to the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and the Pre-Approved Express Draft (consummation of the loan contract). If you are using the Florida specific version (NFL73*), you may notice that the signature language varies from the sample shown. IMPORTANT: If there are “owners of the collateral” other than the borrower(s), they should sign a separate Security Agreement by using the LOANLINER Security Agreement (MXX88*) If you are not already using Laser version MXX888 or newer (e.g. MXX889, MXX88A, etc) or Paper version MXX88C or newer (e.g. MXX88D, MXX88E, etc), we have enhanced our agreement to be used for both the Pre-Approved Vehicle Loans as well as other lending products. Please ensure that you are using an up to date version. Contact the LOANLINER Department if you need to order a supply of the current paper version or to receive an updated electronic image.

21. Authorized Representative of Dealer – The name of the individual at the dealership that is the primary contact for the transaction needs to list their name and telephone number in this space.

22. Authorized Dealer Signature – The Dealer must sign and date here. By signing, the Dealer agrees that all “Instructions To Dealer” will be satisfied and all required documents have been executed and will be provided to the Credit Union.

Note: Consider putting the Pre-Approved Express Draft in a LOANLINER Document Folder (MXX00*) before giving it to the borrower. The borrower will then have a compact, sturdy folder to protect the Pre-Approved Express Draft, and the Dealer will be able to insert all the required support documents when they present the Pre-Approved Express Draft to you for payment.


Chapter 5

Pre-Approved Express Draft (Check)


When Used: This document is used after a borrower has been approved for a Pre-Approved Vehicle Loan and the Pre-Approved Loan and Security and Truth in Lending Disclosure has been completed. The Pre-Approved Express Draft (Check) must be used in conjunction with other required Pre-Approved Vehicle Loan documents including Check Stock for printing checks.

Purpose: This document allows you to pre-approve borrowers who want to shop for/purchase a vehicle.The borrower(s) take the Pre-Approved Express Draft (Check) to the dealership so that once the borrower(s) and Dealer have negotiated a vehicle purchase, the borrower(s) and Dealer can complete and sign the Pre-Approved Express Draft (Check), consummating the loan. Since this Pre-Approved Express Draft is a check, the vehicle Dealer can deposit the check for payment directly at their financial institution. It should be safely treated like any other check used to purchase a vehicle or issued by the Credit Union.

Document Numbers: NXX93* NFL93*

How Distributed: Distribution by Credit Union to Borrower(s) at time of Preapproval: This document must be given to:

The borrower(s).

Distribution by Dealer to Credit Union after document completion: Once the borrower(s) and the Dealer have completed and signed

the Pre-Approved Express Draft (Check), the Dealer needs to make two copies of the completed original front and back, before the check is detached. The Dealer will keep one of the copies for themselves, and needs to send the other copy to the credit union along with any information detailed in the “Instructions to the Dealer”. The Dealer can then detach and use the check as it would any other check.

Distribution by Credit Union to Borrower(s) at time of Loan Completion: Once the credit union has finalized the loan transaction, a copy of the

completed Pre-Approved Express Draft including the signed check, marked “Copy”, must be sent to the borrower(s) along with the Pre-Approved Express Draft Confirmation Receipt.




Page 1 sample



NXX932-e

Dollars

Security Offered:

Borrower 2:

$Amount in Words

Borrower 1:

The following terms and conditions govern the use of thisPre-Approved Express Draft ("Express Draft"). All references to"Credit Union," "we" or "us" mean the Credit Union whose nameappears above. All references to "you" mean each person who signsthe front of the Express Draft as a borrower. All references to"Vehicle" mean the property purchased with the Express Draft. Allreferences to "Dealer" mean the licensed automobile dealer fromwhich the Vehicle will be purchased. All other capitalized termsused but not otherwise defined herein shall have the meanings setforth in the Loan and Security Agreement and Truth in LendingDisclosure ("Loan and Security Agreement").PAYMENTS - After we pay the Express Draft, you will receive aConfirmation Receipt notifying you of the amount of your paymentsand when they are due.COMPLETION OF EXPRESS DRAFT - You and the Dealer agree tocomplete the Express Draft in accordance with the instructions setforth below.SECURITY QUALIFICATIONS - The Vehicle you purchase with theExpress Draft will secure the Loan pursuant to the terms of the Loanand Security Agreement. The Vehicle you purchase must meet therequirements in the "Vehicle Qualifications" section of the"Instructions to Dealer" below.


Amount in Numbers

PAY TO THE ORDER OF (Dealer):

NOTICE TO BORROWER: (a) DO NOT SIGN THIS PAPER BEFORE YOU HAVE READ IT OR IF IT CONTAINS ANYBLANK SPACES. (b) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN. (c) YOU HAVETHE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THE LOAN AND YOU MAYBE ENTITLED TO A PARTIAL REFUND OF THE FINANCE CHARGE.

Credit Union Authorized Signature

Type or Print Name

Type or Print Name Signature Date

By signing the Pre-Approved Express Draft as a borrower, you agree to be bound by and acknowledge receipt of the terms andconditions of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and this Pre-Approved ExpressDraft, all of which are incorporated herein by reference. You also grant us a security interest in the property described abovepursuant to the terms of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.

Loan Type: Approved Limit: $

Signature Date



PRE-APPROVED EXPRESS DRAFT (Check)


2. Fill in the name of the Dealer from whom you are purchasing theVehicle on the "Pay To The Order Of" line. If the Credit Unionhas provided you with a list of approved automobile dealers, theDealer must be included on such list.





By accepting this Express Draft, the Dealer agrees to comply withthe following instructions and confirms the following conditionshave been satisfied:1. APPROVED LIMIT - The amount of the Express Draft does not





5. EXPRESS DRAFT COMPLETED - All "Instructions to Borrower"and "Instructions to Dealer" have been complied with and (a)each borrower whose name is printed on the Express Draft hassigned the Express Draft, and (b) the Express Draft has beenendorsed by the Dealer.


Date Issued: Void After:



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Page 1 instructions


NOTE: Credit union name, address, telephone number, and logo are preprinted on the Check Stock.

1. Credit Union Contact – Enter the name of the person or department that the Dealer or the borrower(s) should contact at the credit union if they have any questions.

2. Telephone – Enter the telephone number of the credit union contact.

3. Borrower Information – Enter the borrower’s name, address and account number.

4. Loan Type – Enter the Loan Type(s) available to the borrower. If only offering one Loan Type, place “N/A” in second line.

5. Approved Limit – If you have any special requirements related to the limit, insert those requirements in the blank area here. An example would be:

“The amount of the Pre-Approved Express Draft cannot exceed _____% of the purchase price on a new vehicle or _____% of NADA retail price on used vehicles.”

You might also consider including information that tells the borrower what can be included in the total amount for which the Pre-Approved Express Draft is written. For example,

“The total of the vehicle purchase price, taxes, fees, and other charges cannot exceed the Approved Limit.”

6. Vehicle Qualifications – If you want to impose limitations on the type of vehicle that may be purchased, insert the limitations in the blank area here. For example:

“Valid on current to 4 year old models only” or “No salvaged vehicles.”

7. Fax To – Enter the fax number the Dealer may use to send all required documents back to the credit union.

8. Lien Recording – Enter the lienholder information (i.e. address, Electronic Lien Title (ELT) Code, etc.)

9. Authorized Vehicle Dealer – The name of the individual at the dealership that is the primary contact for the transaction needs to list their name and telephone number in this space.

10. Date Issued – Enter the date you issue the Pre-Approved Express Draft to the borrower.

11. Void After – Enter the date after which the Pre-Approved Express Draft which includes the check, can no longer be used.

12. Loan Type – The borrower or Dealer should enter the Loan Type for the vehicle being purchased. If you are only offering the borrower(s) one Loan Type, it is a best practice to preprint the Loan Type before the Pre-Approved Express Draft is given to the borrower(s).

13. Approved Limit – Enter the maximum amount the borrower can use to purchase the vehicle. This amount may be lower than the “Amount Financed” on Truth in Lending Disclosure if the borrower wishes to finance the cost of GAP and/or MRC. Remind the borrower that this amount needs to include the price of the vehicle, taxes, title fee and any other charges that may be included in the total purchase or any special requirements as listed in Approved Limit area.



14. Pay to the Order Of – Borrower or Dealer would enter the name of the Authorized Vehicle Dealer that the vehicle is being purchased from. If you know the name of the Dealer the vehicle will be purchased from or wish to limit the borrower to purchasing a vehicle from a particular Dealer, it is a best practice to preprint the Dealer’s name before the Pre-Approved Express Draft is given to the borrower(s).

15. Amount in Numbers – Borrower or Dealer would enter the final purchase price of the vehicle being purchased in numbers. This is the amount paid to the Dealer and would include any extra amounts such as tax, title, license, etc.

16. Amount in Words – Borrower or Dealer would enter the final purchase price of the vehicle being purchased in words.

17. Security Offered – Borrower or Dealer should enter all vehicle information including Year, Make, Model, Type and VIN. Be certain to verify the accuracy of the VIN number.

18. Borrower(s) Signatures – Enter Borrower 1 Name and Borrower 2 Name (if applicable) before presenting to the member.

Upon completion of the Pre-Approved Express Draft, the borrower will sign and date in the signature box provided. By signing as a borrower, they are agreeing to the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and the Pre-Approved Express Draft (consummation of the loan contract). If you are using the Florida specific versions (NFL93*), you may notice that the signature language varies from the sample shown. IMPORTANT: If there are “owners of the collateral” other than the borrower(s), they should sign a separate Security Agreement by using the LOANLINER Security Agreement (MXX88*) If you are not already using Laser version MXX888 or newer (e.g. MXX889, MXX88A, etc.) or Paper version MXX88C or newer (e.g. MXX88D, MXX88E, etc.), we have enhanced our agreement to be used for both the Pre-Approved Vehicle Loans as well as other lending products. Please ensure that you are using an up to date version. Contact LOANLINER Department if you need to order a supply of the current paper version or to receive an updated electronic image.

19. Credit Union Authorized Signature – This is where the credit union representative will sign the check in advance of presenting it to the member.

Note: Consider putting the Pre-Approved Express Draft in a LOANLINER Document Folder (MXX00*) before giving it to the borrower. The borrower will then have a compact, sturdy folder to protect the Pre-Approved Express Draft, and the Dealer will be able to insert all the required support documents.


Chapter 6

Check Stock (Sample of Paper Check)

Document Description

When Used: To work with the Pre-Approved Express Draft electronic image as a “Check”, you will need paper Check Stock on which to print the electronic image (check version) onto. This document is available as a single sheet printed on check quality paper. The “Check” includes your credit union name, address, and logo printed in black ink, a choice of color for the background screen of the check, check security features, MICR encoding information across the bottom of the check, sequential numbering and a perforation above the check. The back of the check will include the Dealer Restrictive Endorsement stamp language.

Purpose: To support the use of the Pre-Approved Express Draft as a “check”.

Document Number: JXX92*

State-Specific Versions: None

Note on Usage: When using the Pre-Approved Express Draft (Check), it is a best practice to print the Pre-Approved Express Draft (Check) onto the Check Stock (Paper) prior to printing any other documents for the loan transaction. This is because the Check Stock (Paper) is preprinted with sequential Express Draft Numbers on them. This is the same Express Draft Number that is printed on the other Pre-Approved Vehicle Loan documents. Therefore, if you need to reprint the Pre-Approved Express Draft (Check) onto another Check Stock (Paper) and you have already printed the other Pre-Approved Vehicle Loan documents, you will need to dispose of all of the documents and start over.



Front page sample

Express Draft No.

Express Draft No.

THIS PRE-APPROVED EXPRESS DRAFT WILL NOT BE PAID UNLESS ALL INFORMATION AND ENDORSEMENTS ARE COMPLETE.

THIS CHECK HAS A COLORED BACKGROUND AND A MICROPRINT BORDER

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SECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSECUREDOCUMENTSE

MICR Information Would Go Here


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Back page sample

Dealer Restrictive Endorsement Stamp Language

InstructionsPlease refer to the document on the preceding pages for the corresponding numbers.

1. Credit Union Contact – Your credit union information (name, address, and logo) will be preprinted on the supply of Check Stock ordered.

2. Express Draft No – Express Draft Numbers will be preprinted on the supply of Check Stock ordered. The starting check number is chosen by the credit union and sequentially numbered.

3. MICR Line – This information is provided by the credit union and will be preprinted on the supply of Check Stock ordered. The MICR information is used for processing of the checks (clearing through the check processing system).

4. Dealer Restrictive Endorsement Stamp Language – This information is preprinted on the back of the supply of Check Stock ordered.

The endorsement language captures the Dealer’s agreement to these terms. The Dealer will sign above “Signature of Authorized Representative of Dealer” after the Pre-Approved Express Draft (Check) has been completed and signed by the borrower(s). It needs to be signed prior to providing a copy to the credit union.

Dealer Warranties/EndorsementBy signing below the vehicle dealer warrants and promises that: a) the vehicle identified on the Pre-Approved Express Draft (“Express Draft”) meets all of the required qualifications set forth therein; b) the necessary documents and fees have been delivered to the appropriate state agency to perfect the lien of the Credit Union as a valid, first priority purchase money security interest in the vehicle identified herein; c) the borrower(s) shown on this Express Draft is/are the owner(s) of record of the vehicle identified herein; d) the borrower(s) executed the signature(s) on the front hereof; e) the amount completed on the Express Draft does not exceed the “Approved Limit” indicated on the Express Draft and satisfies any requirements specified in the “Dealer Instructions”; and f) a copy of the application for title, the front and back of the completed Express Draft and the NADA value or MSRP sticker will be faxed (or sent by other means acceptable to the Credit Union) to the Credit Union within a commercially reasonable time to receive payment.

_______________________________________________________________Signature of Authorized Representative of Dealer

Back of Check

4


Chapter 7

Pre-Approved Express Draft Confimation ReceiptDocument Description – Electronic format only

When Used: This document is used after the Pre-Approved Vehicle Loan has been consummated and the Dealer has been paid.

Purpose: This document is used to communicate the final terms of the Pre-Approved Vehicle Loan to the borrower(s). This document also details the costs of any Payment Protection, GAP, or Extended Warranty (MRC) purchased.

The Pre-Approved Express Draft Confirmation Receipt should be sent out to the borrower(s) as soon as possible once the Pre-Approved Vehicle Loan transaction is completed.

Document Numbers: NXX63* for use with Debt Protection NFL63* for use with Debt ProtectionNXX83* for use with Credit InsuranceNFL83* for use with Credit Insurance.

How Distributed: Distribution by the Credit Union to the Borrower(s) at time of Loan Completion:This document must be given to:The borrower(s) once the credit union has finalized the loan transaction. The credit union must send to the Borrower, along with the Pre-Approved Express Draft Confirmation Receipt, a copy of the completed Pre-Approved Express Draft marked “Copy”.NOTE: This document was designed to fit into a window envelope. There is also an optional marketing message area for the credit union.

Printed Components: Part 1 – Credit Union copy of the Pre-Approved Express Draft Confirmation Receipt

Part 2 – Borrower copy of the Pre-Approved Express Draft Confirmation Receipt


Payment Protection Consideration:

If Payment Protection, GAP, or Extended Warranty (MRC) has not been purchased prior to sending out the Pre-Approved Express Draft Confirmation Receipt, you can use this opportunity to reach out to the borrower(s) to promote these valuable protection products.

If any Payment Protection, GAP, or Extended Warranty (MRC) was sold as part of this Pre-Approved Vehicle Loan, those costs need to be disclosed on the Pre-Approved Express Draft Confirmation Receipt. Once the Pre-Approved Express Draft Confirmation Receipt has been sent, it should not be resent if the borrower(s) subsequently elect Payment Protection, GAP, or Extended Warranty (MRC). You should follow your regular procedures for subsequent election of these coverages.



Page 1 sample

CUNA MUTUAL GROUP 2011 ALL RIGHTS RESERVED NXX831-e

Finance Charge

%

Amount Financed

$ $

Annual Percentage Rate

$

Total of Payments

PRE-APPROVED EXPRESS DRAFTCONFIRMATION RECEIPT

NAME (AND ADDRESS IF DIFFERENT FROM BORROWER 1)

REPAYMENT TERMS

BORROWER 1NAME AND ADDRESS

LOAN NUMBER EXPRESS DRAFT NUMBERLOAN TYPE ACCOUNT NUMBER

You have elected the following Voluntary Payment Protection (if applicable):

Credit Insurance Insurance ChargeSingle Credit Disability $Joint Credit Disability $Single Credit Life $Joint Credit Life $


BORROWER 2


When Payments Are Due: Payments will be due on the day of each month beginning . Your lastpayment will be due on .

This Confirmation Receipt confirms the terms of your recent vehicle purchase pursuant to the Pre-Approved Loan and SecurityAgreement and Truth in Lending Disclosure, Voluntary Payment Protection and/or other coverages elected by you (if applicable) and thePre-Approved Express Draft executed in connection therewith. Please retain this for your records.

Filing Fees

$

LOAN DATE

You have elected the following other coverages (if applicable):

Guaranteed Asset Protection$

Extended Warranty$





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Congratulations on your recent vehicle purchase. Listed below are the final terms of your loan agreement for your records. You will receive a 12-month coupon book within 7-10 business days. Please remember to send verification of insurance coverage for the vehicle listed below within 14 days to ABC Credit Union, 123 Credit Union Street, Anytown, State 12345, or fax to 111.222.3333.

If you have any questions, please feel free to contact us at 222.333.4444. Thank you for choosing ABC Credit Union for your financing needs.

16 16


Page 1 instructions


NOTE: Since this is not a Truth in Lending disclosure and all information represents the final terms of the loan, use of “e” for estimate should not be used

1. Credit Union Information – This space is used to identify the credit union. Have your data processor set up your credit union’s name, address, telephone number and logo to print.

2. Borrower Information – Enter the borrower’s name and address to be used with a window envelope (optional) for ease of mailing.

3. Blank Space – This area can be used for instructions particular to your credit union. You may also use this space to promote any, up to now, unpurchased protection products such as Payment Protection, GAP, or Extended Warranty (MRC), or other credit union products or services. The credit union may also use this space for a simple “Thank you” to the member.

4. Loan Type – Enter the Loan Type for the vehicle that was purchased.

5. Loan Date – Enter the date of loan.


7. Express Draft Number – Enter the Express Draft Number that corresponds to the Express Draft Number on the Pre-Approved Express Draft.



10. Annual Percentage Rate – Enter the same Annual Percentage Rate (APR) that was disclosed on the Truth in Lending Disclosure that corresponds with the Loan Type selected.

11. Finance Charge – Complete the actual (not estimated) finance charge for the loan.

12. Amount Financed – Calculate the actual (not estimated) amount financed by taking:

a. The principal loan amount.

b. Plus 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 added to the Amount Financed. Single premium insurance is financed and will be included in this amount.


13. Total of Payments – Complete the actual (not estimated) total of payments.

For example: If the payment schedule contemplates 36 payments of $100, the total of payments would show $3,600. 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.

14. Filing Fees – Enter the actual amount of any filing fees if paid by the borrower.


15. Payment Schedule – Enter the actual number, amount(s), and due date(s) of the payments. If Voluntary Payment Protection is elected, the premium or program fee should be included in the payment amount.

When Payments Are Due you need to complete the following sentence:

When Payments Are Due: Payments will be due __________ on the ___________ day of each month beginning ____________. Your last payment will be due on _____________.

The first blank line is where you disclose the frequency of the payments.

The second blank line is where you detail the day of the month on which the payments are due.

The third blank line is the date on which the first payment is due.

The fourth blank line is the date on which the last payment is due.

EXAMPLE LANGUAGE 1:

“When Payments Are Due: Payments will be due MONTHLY on the 15th day of each month beginning 05/15/2012. Your last payment will be due on 04/15/2016.”

16. Payment Protection/GAP/Extended Warranty – If Payment Protection (i.e. Credit Insurance or Debt Protection) was sold at the time of pre-approval, it would have been disclosed as an estimate. Enter the actual cost of the Payment Protection here. For GAP or Extended Warranty (MRC), this reconfirms the cost of the coverage previously elected or elected at the time of loan closing.

Illustrates version NXX63* for Debt Protection


Debt Protection (option chosen)$



Extended Warranty$


Chapter 8

Frequently Asked QuestionsQuestion 1: Is the “Approved Limit” on the Pre-Approved Express Draft always the same as the “Amount Financed” on the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure?

Answer: No. The “Approved Limit” found on the Pre-Approved Express Draft, is the amount you want the borrower to be able to shop with. This amount needs to include the price of the vehicle, taxes, title fees and any other charges that may be included in the total purchase or any special requirements as listed in the Approved Limit area of the Pre-Approved Express Draft.

The “Amount Financed” found in the Truth in Lending Disclosure(s) is the total pre-approved amount, that includes not only the cost of the vehicle (sales price, tax, fees, etc), but also any additional payment protection products that are financed into the loan (GAP, MRC, etc). Basically this is the most you will be willing to lend the borrower in regard to this loan.

Question 2: How are estimates used in this transaction?

Answer: Since we are disclosing the maximum amount the member may borrow, the figures in the “Fed Box” are the best information available when the disclosures are made. Therefore, “Amount Financed”, “Finance Charge”, “Total of Payments”, “Payment Amount”, and “Filing Fees” (if applicable) must be marked as an estimate. Place an “e” next to these disclosures. In addition, if Payment Protection is sold at the time of the loan pre-approval, the amount should be marked with an “e”. If an amount must be estimated and that amount can vary depending on the outcome of the transaction, such as filing fees, then it is allowable to use the maximum fee possible for that transaction. This is supported by Regulation Z, Section 1026.17(c) Basis of disclosures and use of estimates.

Question 3: Why doesn’t the borrower have to sign the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure?

Answer: The LOANLINER Pre-Approved Vehicle Loan documents were designed to cross reference one another in various ways. One way is to allow the signature of the borrower(s) on the Pre-Approved Express Draft to serve as the borrower(s) agreement to the terms of the loan and to the loan contract. Further, the borrower(s) need to identify both the vehicle being purchased and the loan terms they are agreeing to, prior to consummating the loan with their signature.

Question 4: What if there are non-borrowing owners of collateral involved in the vehicle purchase?

Answer: If you have “owners of the collateral” other than the borrower(s), they will need to sign a separate Security Agreement by using the LOANLINER Security Agreement (MXX88*) similar to what you do today with other closed-end notes. If you are not already using Laser version MXX888 or newer (e.g. MXX889, MXX88A, etc.) or Paper version MXX88C or newer (e.g. MXX88D, MXX88E, etc.), we have enhanced our agreement to be used for both the Pre-Approved Vehicle Loans as well as other lending products. Please ensure that you are using an up to date version. Contact LOANLINER Department if you need to order a supply of the current paper version or to receive an updated electronic image.


Question 5: Can we use our standard Consumer Loan and Security Agreement and Disclosure Statement with the Pre-Approved Express Draft?

Answer: No. The Pre-Approved Express Draft is designed to be used exclusively with the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure. For example, to consummate the loan, the borrower(s) must sign the Pre-Approved Express Draft which in turn is cross referenced by the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure in the preamble to the Loan and Security Agreement. In addition, the security offered is identified on the Pre-Approved Express Draft and not on the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure. Further the “standard” Consumer Loan and Security Agreement and Disclosure Statement has no way of properly disclosing the Promise to Pay section when there are more than one Loan Type.

Question 6: How will the borrower(s) know the final terms of their loan?

Answer: Your Credit Union will need to send a Pre-Approved Express Draft Confirmation Receipt confirming the final loan amount, the payment amount and first payment due date.

Question 7: How are multiple rates handled on these documents?

Answer: Pre-approving a borrower for multiple rates is one example of why Loan Types must be used with the LOANLINER Pre-Approved Vehicle Loan program. A Loan Type is an offer that is specific as to the Annual Percentage Rate (APR), term, collateral requirements and any other characteristics of the offer that may differ from other offers. Therefore even if all other loan terms are identical, offering multiple rates will require that you use additional Truth in Lending Disclosures (Pre-Approved). The standard Pre-Approved Vehicle Loan program document supports up to two Loan Types.

Question 8: How is the Payment Schedule completed?

Answer: Because we are basing the disclosures on the best information available when the disclosures are made, the “When Payments are Due” section allows you to input the day of the month and number of days after funding that payments are due. The sentence states: Payments will be due ______ beginning on the ______ day of the month that first occurs ______ days from funding until the loan is repaid in full.

Question 9: How are Voluntary Payment Protection (Credit Insurance and Debt Protection), GAP and Extended Warranty (MRC) handled with a Pre-Approved Express Draft?

Answer: These products are integrated at various stages of the lending event. Please refer to the “General Information” section for further information on this topic.

Question 10: We do risk-based pricing on our vehicle loans. When should we provide the Risk-Based Pricing Notice as required under the FACT Act Risk-Based Pricing Rules?

Answer: Notice must be provided before consummation of the transaction but not before the terms of credit have been communicated to the borrower(s). Therefore, once the borrower(s) have been approved, the notice can be provided followed by giving the borrower the Pre-Approved Express Draft and Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.


Question 11: Can I use Pre-Approved Vehicle Loan document for any of the following loans scenarios:

a. Personal Loans

b. Other Secured Loans (Computers, RV’s, Boats, etc)

c. Debt Consolidation

d. Private Party Vehicle purchases

Answer: No.This program and its documents are written and structured to only support loans to purchase a vehicle at a dealership.

Question 12: In this Pre-Approved Vehicle Loan program (PAVL) are the loans considered Open-End Credit or self-replenishing credit?

Answer: No. Pre-Approved Vehicle Loans are not Open-End credit. By definition, in order to be Open End, the creditor must reasonably contemplate repeated transactions under the same account or credit contract, which this program does not allow. Further, under Open-End, the amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid. Under PAVL, there is no “credit limit” or “account” for the borrower to take advances against. Making payments on a PAVL Loan simply results in the payment of interest charges and fees, and the reduction of principal.

Question 13: If we are using the Florida specific versions of the Pre-Approved Vehicle Loan Program (PAVL) can we use these documents to lend to our members who purchase a vehicle and reside in another state?

Answer: No. The Florida versions of the PAVL documents are specifically designed to not be subject to the Florida Documentary Stamp Tax and do not contain state specific language for other states. If you use the Florida versions for lending in a state other than Florida it may not have the specific disclosures or security agreement language for that state. If you have questions about a specific situation, please contact your LOANLINER representative.

Chapter 9

Additional GuidanceSample 1Pre-Approved Vehicle Loan Scenario:

Individual pre-approved vehicle purchase with Credit Insurance, GAP, and financed Filing Fee.

Details: John Q. Member is interested in purchasing either a new vehicle or a vehicle that is one or two years old with low mileage and financing a loan for that vehicle with ABC Federal Credit Union.

After submitting a loan application to the credit union on March 1st, John Q. Member was pre-approved for up to $30,000 to purchase a vehicle from a Dealer.

Based on what type of vehicle John wants to shop for, the credit union has pre-approved him to purchase either a new vehicle (current model year & not previously titled) or a slightly used vehicle (previously titled vehicle three or fewer model years old). This is what would be known as offering two Loan Types (“new vehicle” and “slightly used vehicle.”)

The “new vehicle” Loan Type has an interest rate of 4% with a term of 60 months. The “slightly used vehicle” Loan Type has an interest rate of 4% with a term of 48 months. All other loan terms not discussed are the same whether the vehicle is “new” or “slightly used.”

There is a $10.00 filing fee which John will be financing into the loan.

John has chosen to elect Single Credit Disability and Single Credit Life Insurance. The cost of Credit Insurance is not financed into the loan but paid on a monthly basis.

John also wants to purchase Guaranteed Asset Protection (GAP) which he will finance into the loan. The cost of GAP for any vehicle John may purchase is $400.

On March 30th, 2012, John purchased a 2012 Toyota Prius 4 door from Anytown USA Auto Sales for $26,952.31 which includes the sale price, tax, license, and all other vehicle fees.

John and his car Dealer, Monte Hall Jr., completed and signed the Pre-approved Express Draft (Site Draft) (from now on referred to as the Express Draft) on March 30th, 2012. Once the Express Draft was completed and signed, Monte faxed to the credit union a copy of the Express Draft, a copy of the purchase order for the Prius, a copy of the application for title showing ABC Federal Credit Union as the lien holder, and the MSRP Sticker.

After reviewing the documents faxed in by Monte, the credit union was able to book the loan into their system and also fund the loan on March 30th, 2012.


Sample 1

LOAN TYPE

NXX232-e




NAME AND ADDRESS





Amount Financed

$




$






Late Charge:$

Filing Fees$


%


$








ToTo$





DATE

15th

*


2

1

4

7

5 6

16

7

9 10 11 12

1514

17 18

19

20

13

8

3

a b

c de

ABC Federal Credit Union

03/01/2012

John Q. Member123 Any St.Anytown, USA 12345

N/A

123456

New Vehicle

4.00

20.00% of interest due if 7 or more days late, minimum of $5.00, maximum of $20.00.

30,000.00

State Agency29,590.00 10.00

400.00 Insurance Company

N/A

59 579.94 e 1 579.69 e

3,144.97 e 30,000.00 e

N/A

Monthly 14

10.00 N/A

34,796.15 e

98765 00-02468 123-4567-8

SAMPLE #1











In this Loan and Security Agreement ("Agreement"), all references to "Credit Union," "we," "our," or "us," mean the Credit Union whosename appears above and anyone to whom the Credit Union assigns or transfers this Agreement. All references to "you," "your," or"borrower" mean each person who signs the Pre-Approved Express Draft ("Express Draft") as a borrower. All references to the"Disclosure Statement" shall refer to the Truth in Lending Disclosure(s) provided as part of the Pre-Approved Loan and SecurityAgreement and Truth in Lending Disclosure. All references to "Loan" shall mean, the amount actually borrowed pursuant to thisAgreement, including without limitation any fees financed with the proceeds thereof. By signing the Express Draft (which is incorporatedherein by reference) you acknowledge that you have received and read in full the Pre-Approved Loan and Security Agreement and Truth inLending Disclosure and the Express Draft and agree to the terms, obligations and conditions set forth in this Agreement and the ExpressDraft.1. SELECTION OF LOAN TYPE - You acknowledge and agree that we have provided a Disclosure Statement setting forth the estimatedterms of each Loan Type being offered to you by the Credit Union. The Loan Type is specified on the Disclosure Statement(s) provided inconnection herewith. You agree to fill-in the Loan Type you have selected on the Express Draft in accordance with the instructions setforth therein. You further acknowledge and agree that the terms of the Loan will correspond to the terms of the Loan Type you selectbut that certain terms may vary depending on the actual amount and date of the Loan.2. PROMISE TO PAY - You promise to pay to the Credit Union the principal amount of the Loan plus interest on the unpaid balance untilthe entire outstanding balance plus interest has been repaid. The interest rate(s) applicable to each available Loan Type are set forthbelow. Interest will begin to accrue on the date we pay the Express Draft. The principal amount of the Loan will be the amount enteredon the Express Draft plus any fees that you finance with the proceeds of the Loan.Loan Type: For fixed rate loans the interest rate is % per year.Loan Type: For fixed rate loans the interest rate is % per year.3. COLLECTION COSTS - You agree to pay all costs of collecting the amount you owe under this Agreement, including court costs and reasonable attorney fees.

21

22

New VehicleSlightly Used Vehicle


John Q. Member

123456

N/A

00-02468

4.004.00









John Q. Member

123456

N/A

00-02468



Explanation of Sample:1. Credit Union Name – ABC Federal Credit Union.

2. Date – 03/01/2012, the date the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure was prepared and delivered to John.

3. Loan Number – 123456, the number the credit union assigned to John’s loan.

4. Express Draft Number – 98765, this number came from the Express Draft document.

5. Account Number – 00-02468, which is John’s member number.

6. Group Policy Number – 123-4567-8 is ABC Federal Credit Union’s Group Policy Number, also known as their Contract Number.

7. Borrower(s) Name and Address – John’s full name and address were entered in this section. N/A was entered into the “BORROWER 2” section, as John requested an individual loan.

8. Loan Type – New Vehicle In this example, the credit union presented the borrower with two Loan Types. This document

discloses the first Loan Type, “New Vehicle.” The other will appear on a Truth in Lending Disclosure (Pre-Approved) document.

9. Annual Percentage Rate – 4.00% In this example, the Annual Percentage Rate and the contract interest rate are the same, 4.00%.

This is because there are no other components of the finance charge other than simple interest.

10. Finance Charge – $3,144.97 e This is the dollar amount of a contract rate of 4.00% on $30,000 for 60 months. We used an

“e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount of $30,000.

11. Amount Financed – $30,000 e This is the maximum approved loan amount. John is using this amount not only to purchase the

vehicle, but also to finance the cost of GAP coverage ($400) and the filing fee ($10.00.) The cost of Credit Insurance is not included in the amount financed. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

12. Total of Payments – $34,796.15 e This amount equals the sum of all of the payments listed in the “Your Payment Schedule will be:”

section below. Since the cost of Credit Insurance was included in the amount disclosed in the “Your Payment Schedule will be:” section, it must also be 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. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

13. Property Insurance – N/A In this example the credit union doesn’t offer insurance.


14. Filing Fee – $10.00 In this example, the filing fee is financed into the loan. Since this is a known amount that will not

vary, we did not use an “e” for estimate.

15. Non-Filing Insurance – N/A. In this example, the credit union does not have non-filing insurance.

16. Late Charge – In this example, the late charge is 20% of interest due if 7 or more days late with a minimum of $5.00 and maximum of $20.00.

17. Number of Payments – In this example there are two sets of payments to repay the loan. The first is 59 payments of $579.94 and the second is 1 payment of $579.69.

18. Amount of Payments – In this example the payments include the cost of both Single Credit Disability and Single Credit Life. This amount of each set of payments was based on the maximum approved loan amount of $30,000, therefore we used “e” for estimate.

19. When Payments are Due – This example is completed as follows: “When Payments Are Due: Payments will be due MONTHLY beginning on the 15th day of the

month that first occurs 14 days from funding until the loan is repaid in full.”

20. Itemization of Amount Financed –

a. “Itemization of Amount Financed” – $30,000.

b. “Prepaid Finance Charge” – “N/A” as there were no Prepaid Finance Charges.

“Amount Paid to Others on Your Behalf”

c. $29,590.00 – The amount of the funds sent to the Dealer.

d. $400.00* – The cost of the Guaranteed Asset Protection coverage with an asterisk to indicate that the credit union is retaining a portion of this amount.

e. $10.00 – the cost of the filing fee, all of which is sent to the State Department of Motor Vehicles.

21. Promise to Pay – For this example, the Loan Types of “New Vehicle” and “Slightly Used Vehicle” and their corresponding interest rates, both of which are 4.00%, were disclosed.

22. Collection Costs – You agree to pay all costs of collecting the amount you owe under this Agreement, including court costs and reasonable attorney fees.


Sample 1

NXX332-e




NAME AND ADDRESS




Amount Financed

$ $






Late Charge:$

Filing Fees$


%


$




LOAN TYPE








21 4 5

7

6

9 10 11

13 14

18

15

16 17

8

3

12

6

03/01/2012


N/A

123456

Slightly Used Vehicle

4.00


47 704.04 e 1 703.67 e

2,490.96 e

Monthly 15th 14

30,000.00 e

N/A 10.00 N/A

33,793.55 e

98765 00-02468 123-4567-8

SAMPLE #1



Explanation of Sample:1. Date – 03/01/2012, the date the Pre-Approved Loan and Security Agreement and Truth in

Lending Disclosure was prepared and delivered to John.






7. Loan Type – Slightly Used Vehicle In this example, the credit union presented the borrower with two Loan Types. This document

discloses the second Loan Type, “Slightly Used Vehicle”





10. Amount Financed – $30,000 e This amount is the maximum approved loan amount. John is using this amount not only to

purchase the vehicle, but also to finance the cost of GAP coverage ($400) and the filing fee ($10.00). The cost of Credit Insurance is not included in the amount financed. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

11. Total of Payments – $33,793.55 e This amount equals the sum of all of the payments listed in the “Your Payment Schedule will

be:” section below. Since the cost of Credit Insurance was included in the amount disclosed in the “Your Payment Schedule will be:” section, it must also be 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. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

12. Property Insurance – N/A in this example the credit union doesn’t offer insurance.

13. Filing Fee – $10.00 In this example, the filing fee is financed in to the loan. Since this is a known amount that will not


14. Non-Filing Insurance – N/A In this example, the credit union does not have non-filing insurance.




17. Amount of Payments – In this example the payments include the cost of both Single Credit Disability and Single Credit Life. This amount of each set of payments was based on the maximum approved loan amount of $30,000, therefore we used “e” for estimate.

18. When Payments are Due – This example is completed as follows:




Sample 1

NXX731-e





Dollars

Security Offered:

X

$


Amount in Words



Amount in Numbers


X



















SIGNATURES



DATE

X


Account Number:Borrower 1 Name and Address: Borrower 2 Name and Address:Credit Union Contact: Telephone:3

4 5 6

11

10

15

7

12

1716

2

9

14

1

8

13

18 19

21

22

20

2324Monte Hall, Jr. 03/30/2012Monte Hall, Jr. (231) 231-9999

John Q. Member


00-02468 N/A

The total of the vehicle purchase price, taxes, fees, and other charges cannot exceed the Approved Limit.

New vehicle: current model year & not previously titled; slightly used vehicle: previously titled vehicle three or fewer model years old.

(231) 231-2312

(231) 231-1111

03/01/2012 04/01/2012

Anytown USA Auto Sales29,590.00

98765

Sue Smith

SAMPLE #1

New Vehicle Slightly Used Vehicle

New VehicleABC Federal Credit Union

26,952.31

2012 Toyota Prius 4 door 123456789A1B2C3D4

Twenty six thousand nine hundred and fifty two dollars and 31/100

John Q. Member 03/30/2012

ABC Federal Credit Union321 Credit Union Ave.Anytown, USA 12345Electronic Lien Title Code: 135791113


Explanation of Sample:Items completed by credit union prior to issuing the Express Draft: 1-11, 13-16 & 22

Items completed by John Q. Member (Borrower) or Monte Hall Jr. (Dealer): 12, 17-21, 23 & 24

1. Express Draft Number – 98765 In this example the Express Draft Number is 98765 which was the next available number on the

list of Express Draft Numbers created by the credit union.

2. Credit Union Contact – Sue Smith In this example, Sue Smith, Loan Officer, is the individual at the credit union who should be

contacted by the member or Dealer with any questions.

3. Telephone Number – (231) 231-2312 This is Sue Smith’s direct line at the credit union.

4. Borrower 1 Name and Address – John’s full name and address were entered in this section.


6. Borrower 2 Name and Address – N/A was entered as John requested an individual loan

7. Loan Types – In this example, the credit union presented the borrower with 2 Loan Types: New Vehicle and Slightly Used Vehicle.

8. Approved Limit – The credit union noted that the total of the vehicle purchase price, taxes, fees and other charges cannot exceed the Approved Limit.

9. Vehicle Qualifications – In this example, John may purchase a new vehicle which is defined as a current model year & not previously titled vehicle or he may purchase a slightly used vehicle defined as a previously titled vehicle three or fewer model years old.

10. Fax Number – (231) 231-1111 This is the fax number the credit union would like all of the documentation to be sent to.

11. Lien Recording – The credit union provided their name, address and Electronic Lien Title Code information.

12. Loan Type – New Vehicle Since John purchased a previously untitled, current model year Prius, Monte Hall Jr., the car

Dealer helping John, wrote in “New Vehicle” to indicate the correct Loan Type.

13. Date Issued – This offer was issued on March 1, 2012

14. Void After – This offer is valid for 31 days and therefore expires on April 1st, 2012

15. Approved Limit – $29,590.00 In this example, the member’s Approved Limit is $29,590.00. This amount represents the

$30,000 pre-approved loan amount, less the $400.00 for GAP and the $10.00 Filing Fee both of which John told the credit union he wanted to finance. This ensures that the borrower does not exceed the $30,000 pre-approved loan amount when purchasing a vehicle.


16. Credit Union – The credit union completed their name prior to giving this document to the member.

17. Will Pay To: (Dealer) – Monte Hall Jr. wrote in the name of his Dealership, Anytown USA Auto Sales, where John purchased his Prius.

18. Amount in Numbers – The final cost of the vehicle including all taxes, fees, and license was written in by Monte as $26,952.31.

19. Amount in Words – The final purchase price is shown here in words.

20. Security Offered – A full description of the vehicle is shown here.

21. Borrower(s) Signatures – John Q. Member signed and dated here once the document was fully completed.

22. Borrower(s) Name – John Q. Member was preprinted here by the credit union.

23. Name of Authorized Representative of Dealer – Monte Hall Jr., the Dealer who handled the transaction for John, printed his name and provided a phone number where the credit union could contact him with any questions.

24. Authorized Representative of Dealer Signature and Date – Monte signed and dated the completed Express Draft.



Sample 1


Finance Charge

%

Amount Financed

$ $


$

Total of Payments



REPAYMENT TERMS




Credit Insurance Insurance ChargeSingle Credit Disability $Joint Credit Disability $Single Credit Life $Joint Credit Life $


BORROWER 2




Filing Fees

$

LOAN DATE



Extended Warranty$





7

11 13

4

8

12

3 6

10

2

1

5

9

16

14 15

Congratulations on your recent vehicle purchase. Listed below are the final terms of your loan agreement for your records. You will receive a 60-month coupon book within 7-10 business days. Please remember to send verification of insurance coverage for the vehicle listed below within 14 days to ABC Federal Credit Union, 123 Credit Union Street, Anytown, State 12345, or fax to 231-231-1111. If you have any questions, please feel free to contact us at 231-231-2312.

Thank you for choosing ABC Federal Credit Union for your financing needs.

17 18

19

SAMPLE #1


New Vehicle 03/30/2012 123456 98765 00-02468


N/A

4.00 2,878.25 27,362.31

Monthly 15th 04/15/201203/15/2017

31,798.15 10.00

591

529.97529.92

400.00

N/A

1,207.59 N/A 350.00 N/A

Pre-Approved Confirmation Receipt

Explanation of Sample:NOTE: Since this document communicates the final terms of the loan to the borrower, there is no use of “e” for estimate

1. Borrower(s) Name and Address (window envelope) – Since ABC Federal Credit Union uses window envelopes, John’s name and address was printed here.

2. Message from Credit Union – ABC Federal Credit Union used this space to congratulate John on his vehicle purchase, to notify him that he will be receiving a coupon book, and to request that he send in a copy of his verification of insurance coverage.

3. Loan Type – New Vehicle In this example, the credit union listed “New Vehicle” which corresponds to the Loan Type John

selected by purchasing the 2012 Toyota Prius.

4. Loan Date – 03/30/2012


6. Express Draft Number – 98765, this is the number that was assigned to the Express Draft.





10. Finance Charge – $2,878.25 This is the dollar amount of a contract rate of 4.00% on $27,362.31 for 60 months.

11. Amount Financed – $27,362.31 This amount includes $26,952.31 for the vehicle plus the $10.00 filing fee and the $400.00

Guaranteed Asset Protection.

12. Total of Payments – $31,798.15 This amount equals the sum of all of the payments listed in the “Your Payment Schedule will

be:” section below. Since the cost of Credit Insurance was included in the amount disclosed in the “Your Payment Schedule will be:” section, it must also be 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.

13. Filing Fees – $10.00 In this example, the filing fee is financed into the loan.


15. Amount of Payments – In this example, the payments include the cost of Single Credit Disability and Single Credit Life based on the final loan amount of $27,362.31.


16. When Payment Are Due – In this example we completed this sentence as follows:

“When Payments Are Due: Payments will be due MONTHLY beginning on the 15th day of each month beginning 04/15/2012. Your last payment will be due on 03/15/2017.

17. Voluntary Payment Protection – The final cost of Single Credit Disability ($1,207.59) and Single Credit Life ($350.00) are disclosed here based on the final loan amount.

18. Guaranteed Asset Protection – $400.00

19. Extended Warranty – N/A Since the member did not take the Extended Warranty, N/A is disclosed here.


Sample 2

Pre-Approved Vehicle Loan Scenario:Joint pre-approved vehicle purchase with Debt Protection, GAP, and cash Filing Fee.

Details:Bob Smith and his wife Sally Smith, are interested in purchasing a new vehicle and financing a loan for that vehicle with ABC Federal Credit Union.

After submitting a loan application to the credit union on March 1st, Bob and Sally were pre-approved for up to $40,000 to purchase a vehicle from a Dealer. They also have a down payment of $10,000 saved up.

Bob and Sally are definitely going to buy a new minivan to accommodate their growing family of five. ABC Federal Credit Union offers a Loan Type called “new vehicle” (current model year or previous model year & not previously titled). This is what would be known as offering one Loan Type.

The “new vehicle” Loan Type has an interest rate of 3.90% with a term of 72 months.

There is a $15.00 filing fee which Bob and Sally will pay for in cash.

Bob and Sally chose to elect Debt Protection. The cost of Debt Protection is not financed into the loan but paid on a monthly basis.

Bob and Sally also want to purchase Guaranteed Asset Protection (GAP) which they will finance into the loan. The cost of GAP for any vehicle the Smith’s may purchase is $400.

On March 5th, 2012, Bob and Sally purchased a 2012 Honda Odyssey Touring Elite from Downtown Auto Sales for $46,077.13 which includes the sale price, tax, license, and all other vehicle fees.

Bob, Sally, and their Dealer, Dave Downtown, completed and signed the Pre-approved Express Draft (Check) (from now on referred to as the Express Draft) on March 5th, 2012. Once the Express Draft was completed and signed, Dave faxed to the credit union a copy of the completed and signed Express Draft (front and back) prior to removing the check portion, a copy of the purchase order for the Odyssey, a copy of the application for title showing ABC Federal Credit Union as the lien holder, and the MSRP Sticker.

The credit union made note in its system what required documentation had been received from the Dealer.

On March 7th, 2012, Dave took the check portion of the Express Draft to his bank, 1st Savings Bank of Anytown, to deposit it into the dealership’s account.

On March 9th, 2012, ABC Federal Credit Union was presented the check for payment. The credit union verified all required information had been received and proceeded to post the check.

The credit union was able to book the loan into their system on March 10th, 2012.



Sample 2

LOAN TYPE

NXX232-e




NAME AND ADDRESS





Amount Financed

$




$






Late Charge:$

Filing Fees$


%


$








ToTo$





DATE

15th

2

1

4

7

5 6

16

7

9 10 11 12

1514

17 18

19

20

13

8

3

a b

c d


03/01/2012

Bob Smith321 Every Ave.Anytown, USA 12345

Sally Smith

1357911

New Vehicle

3.90


40,000.00

39,600.00

400.00 Insurance Company

N/A

71 638.02 e1 637.28 e

5,034.90 e 40,000.00 e

N/A

Monthly 30

15.00 N/A

45,936.70 e

98789 00-05432 123-4567-8

SAMPLE #2

*











21 New VehicleN/A

3.90N/A

You agree to pay all costs of collecting the amount you owe under this Agreement, including court costs and reasonable attorney fees.

ABC Federal Credit Union 1357911 00-05432Bob Smith Sally Smith









Bob Smith

1357911

Sally Smith

00-05432




2. Date – 03/01/2012, the date the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure was prepared and delivered to Bob and Sally.

3. Loan Number – 1357911, the number the credit union assigned to Bob and Sally’s loan.


5. Account Number – 00-05432, which is Bob and Sally’s member number.


7. Borrower(s) Name and Address – Bob’s full name and address were entered in this section. Sally’s name only was entered into the “BORROWER 2” section, as this is a joint loan and Sally has the same address as Bob.

8. Loan Type – New Vehicle In this example, the credit union presented the borrower with one Loan Type, “New Vehicle.”



10. Finance Charge – $5.034.90 e This amount is the dollar amount of a contract rate of 3.90% on $40,000 for 72 months. We used

an “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount of $40,000.

11. Amount Financed – $40,000 e This is the maximum approved loan amount. Bob and Sally are using this amount not only to

purchase the vehicle, but also to finance the cost of GAP coverage ($400.) We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.


be:” section below. Since the cost of Debt Protection was included in the amount disclosed in the “Your Payment Schedule will be:” section, it must also be included in the Total of Payments. When monthly Debt Protection is included in the payment, the finance charge plus the amount financed will not equal the total of payments. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

13. Property Insurance – N/A In this example the credit union doesn’t offer insurance.

14. Filing Fee – $15.00 In this example, the filing fee is paid in cash. Since this is a known amount that will not vary, we

did not use an “e” for estimate.


15. Non-Filing Insurance – N/A. In this example, the credit union does not have non-filing insurance.


17. Number of Payments – In this example there are two sets of payments, the first is 71 payments of $638.02 and the second is 1 payment of $637.28.

18. Amount of Payments – In this example the payments include the cost of Debt Protection. The amount of each set of payments was based on the maximum approved loan amount of $40,000, therefore we used “e” for estimate.

19. When Payments are Due – In this example we completed this sentence as follows:






c. $39,600.00 – The amount of the funds sent to the Dealer

d. $400.00* – The cost of the Guaranteed with an asterisk to indicate that the credit union is retaining $100.00.

21. Promise to Pay – For this example, the Loan Type of “New Vehicle” and its corresponding interest rate of 3.9% was disclosed.


Truth in Lending Disclosure (Pre-Approved)Since this loan involves only one Loan Type, the Truth in Lending Disclosure (Pre-Approved) is not used



Sample 2

SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DOCUMENT SECURE DO

SECURE DOCUMENT SECURE DOCUM

ENT SECURE DOCUMENT SECURE DOCUM





ENT SECU

THIS CHECK HAS A COLORED BACKGROUND AND A MICROPRINT BORDER

THIS PRE-APPROVED EXPRESS DRAFT WILL NOT BE PAID UNLESS ALL INFORMATION AND ENDORSEMENTS ARE COMPLETE.

Express Draft No.

SECU

RE D

OCUM

ENT

SECU

RE D

OCUM

ENT

SECU

RE D

OCUM

ENT

SECU

RE D

OCUM

ENTS

SECU

RE D

OCUM

ENT

SECU

RE D

ODOC

UMEN

T S

ECUR

E DO

CUM

ENTS

SEC

URE

DOCU

MEM

T SE

CURE

DOC

UMEN

TS S

ECUR

E DO

CUM

ENT

SECU

RE D

OCUM

ENT

SECU

RED

DOCU

M



NXX932-e

Dollars

Security Offered:

Borrower 2:

$Amount in Words

Borrower 1:

The following terms and conditions govern the use of thisPre-Approved Express Draft ("Express Draft"). All references to"Credit Union," "we" or "us" mean the Credit Union whose nameappears above. All references to "you" mean each person who signsthe front of the Express Draft as a borrower. All references to"Vehicle" mean the property purchased with the Express Draft. Allreferences to "Dealer" mean the licensed automobile dealer fromwhich the Vehicle will be purchased. All other capitalized termsused but not otherwise defined herein shall have the meanings setforth in the Loan and Security Agreement and Truth in LendingDisclosure ("Loan and Security Agreement").PAYMENTS - After we pay the Express Draft, you will receive aConfirmation Receipt notifying you of the amount of your paymentsand when they are due.COMPLETION OF EXPRESS DRAFT - You and the Dealer agree tocomplete the Express Draft in accordance with the instructions setforth below.SECURITY QUALIFICATIONS - The Vehicle you purchase with theExpress Draft will secure the Loan pursuant to the terms of the Loanand Security Agreement. The Vehicle you purchase must meet therequirements in the "Vehicle Qualifications" section of the"Instructions to Dealer" below.


Amount in Numbers

PAY TO THE ORDER OF (Dealer):

NOTICE TO BORROWER: (a) DO NOT SIGN THIS PAPER BEFORE YOU HAVE READ IT OR IF IT CONTAINS ANYBLANK SPACES. (b) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN. (c) YOU HAVETHE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE UNDER THE LOAN AND YOU MAYBE ENTITLED TO A PARTIAL REFUND OF THE FINANCE CHARGE.

Credit Union Authorized Signature

Type or Print Name

Type or Print Name Signature Date

By signing the Pre-Approved Express Draft as a borrower, you agree to be bound by and acknowledge receipt of the terms andconditions of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure and this Pre-Approved ExpressDraft, all of which are incorporated herein by reference. You also grant us a security interest in the property described abovepursuant to the terms of the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure.

Loan Type: Approved Limit: $

Signature Date



PRE-APPROVED EXPRESS DRAFT (Check)


2. Fill in the name of the Dealer from whom you are purchasing theVehicle on the "Pay To The Order Of" line. If the Credit Unionhas provided you with a list of approved automobile dealers, theDealer must be included on such list.





By accepting this Express Draft, the Dealer agrees to comply withthe following instructions and confirms the following conditionshave been satisfied:1. APPROVED LIMIT - The amount of the Express Draft does not





5. EXPRESS DRAFT COMPLETED - All "Instructions to Borrower"and "Instructions to Dealer" have been complied with and (a)each borrower whose name is printed on the Express Draft hassigned the Express Draft, and (b) the Express Draft has beenendorsed by the Dealer.


Date Issued: Void After:


7

12

17

9

10

8

11

16

14 1513

2019

18

21

22 2324

3

45 6

2 1


New VehicleN/A

00-05432

Express Draft No. 98789

98789

Sally Smith

SAMPLE #2

John Dover (231) 231-2313


New vehicle: current or previous model year & not previously titled.

(231) 231-1111

ABC Federal Credit Union123 Credit Union StreetAnytown, USA 12345Electronic Lien Title Code: 135791113

Dave Downtown (231) 231-9999

0120450781102 1201230450

03/01/2012

New Vehicle

Downtown Auto Sales36,077.13

Bob Smith Bob Smith 3/5/2012

Sally Smith Sally Smith John Dover3/5/2012

2012 Honda Odyssey Minivan 987654321Z2Y4XW78

Thirty-six thousand, sevety-seven and 13/100s---------------------------------------------------------------------------------------

39,600.00

04/01/2012


Dealer Warranties/EndorsementBy signing below the vehicle dealer warrants and promises that: a) the vehicle identified on the Pre-Approved Express Draft (“Express Draft”) meets all of the required qualifications set forth therein; b) the necessary documents and fees have been delivered to the appropriate state agency to perfect the lien of the Credit Union as a valid, first priority purchase money security interest in the vehicle identified herein; c) the borrower(s) shown on this Express Draft is/are the owner(s) of record of the vehicle identified herein; d) the borrower(s) executed the signature(s) on the front hereof; e) the amount completed on the Express Draft does not exceed the “Approved Limit” indicated on the Express Draft and satisfies any requirements specified in the “Dealer Instructions”; and f) a copy of the application for title, the front and back of the completed Express Draft and the NADA value or MSRP sticker will be faxed (or sent by other means acceptable to the Credit Union) to the Credit Union within a commercially reasonable time to receive payment.

xSignature of Authorized Representative of Dealer

25 Dave Downtown 3/5/2012

Pre-Approved Express Draft (Check)

Explanation of Sample:

Items completed by credit union prior to issuing the Express Draft: 1-11, 13-17, 22, & 24

Items completed by Bob and Sally Smith (Borrowers) or Dave Downtown (Dealer): 12, 18-21, 23, & 25

1. Express Draft Number – 98789 In this example the Express Draft Number is 98789 which was preprinted on the Check Stock that

the credit union used to print the Express Draft.

2. Credit Union Contact – John Dover In this example, John Dover, Loan Officer, is the individual at the credit union who should be


3. Telephone Number – (231) 231-2313 This is John Dover’s direct line at the credit union.

4. Borrower 1 Name and Address – Bob Smith’s full name and address were entered in this section.


6. Borrower 2 Name and Address – Sally Smith’s full name was entered in this section. We did not enter in her address as it is the same as Bob’s.

7. Loan Types – In this example, the credit union presented the borrower with 1 Loan Type: New Vehicle.

8. Approved Limit – The credit union noted that the total of the vehicle purchase price, taxes, fees and other charges cannot exceed the Approved Limit.

9. Vehicle Qualifications – In this example, Bob and Sally may purchase a new vehicle which is defined as a current model year or previous model year & not previously titled vehicle.

10. Fax Number – (231) 231-1111 This is the fax number the credit union would like all of the documentation to be sent to.

11. Lien Recording – The credit union provided their name, address and Electronic Lien Title Code information.

12. Name of Authorized Representative of Dealer – Dave Downtown, the Dealer who handled the transaction for Bob and Sally, printed his name and provided a phone number where the credit union could contact him with any questions.

13. Express Draft Number – 98789 In this example the Express Draft Number is 98789 which was preprinted on the Check Stock that

the Credit Union used to print the Express Draft.




16. Loan Type – New Vehicle Since Bob and Sally stated they were purchasing a new minivan, “New Vehicle” was preprinted in

this space by the credit union.

17. Approved Limit – $39,600.00 In this example, the member’s Approved Limit is $39,600.00. This amount represents the $40,000

pre-approved loan amount, less the $400.00 for GAP which Bob and Sally told the credit union they wanted to finance. This ensures that the borrowers do not exceed the $40,000 pre-approved loan amount when purchasing a vehicle.

18. Pay to the Order of (Dealer) – Dave Downtown wrote in the name of his Dealership, Downtown Auto Sales, where Bob and Sally purchased their minivan.

19. Amount in Numbers – The final cost of the vehicle including all taxes, fees, and license was written in by Dave Downtown as $36,077.13.



22. Borrower(s) Name(s) – Bob and Sally Smith’s names were printed here by the credit union.

23. Borrower(s) Signatures – Bob and Sally signed and dated here once the document was fully completed.

24. Credit Union Authorized Signature – John Dover signed the Express Draft before giving it to Bob and Sally.

25. Authorized Representative of Dealer Signature and Date – Dave Downtown signed and dated the back of the completed Express Draft which also endorses the check so that it may be deposited or cashed.



Sample 2


Finance Charge

%

Amount Financed

$ $


$

Total of Payments



REPAYMENT TERMS




Debt Protection(option chosen)

$


BORROWER 2



Filing Fees

$

LOAN DATE



Extended Warranty$


7

11 13

4

8

12

3 6

10

2

1

5

9

16

14 15



17 18

19

SAMPLE #2

Bob and Sally Smith321 Every Ave.Anytown, USA 12345

New Vehicle 03/10/2012 1357911 98789 00-05432


Sally Smith

3.90 4,552.12 36,477.13

Monthly 15th 04/15/201203/15/2018

41,850.86 15.00

711

581.27580.69

400.00

N/A

Transitional Life



1. Borrower(s) Name and Address (window envelope) – Since ABC Federal Credit Union uses window envelopes, Bob and Sally Smith’s names and address were printed here.

2. Message from Credit Union – ABC Federal Credit Union used this space to congratulate Bob and Sally on their vehicle purchase, to notify them that they will be receiving a coupon book, and to request that they send in a copy of their verification of insurance coverage.

3. Loan Type – New Vehicle In this example, the credit union listed “New Vehicle” which corresponds to the Loan Type Bob

and Sally selected by purchasing the 2012 Honda Odyssey minivan.

4. Loan Date – 03/10/2012

5. Loan Number – 1357911, the number the credit union assigned to Bob and Sally’s loan.

6. Express Draft Number – 98789 This is the number that was preprinted on the Check Stock and in turn appears on the

Express Draft.


8. Borrower(s) Name and Address – Bob’s full name and address were entered under “BORROWER 1.” Sally’s name only was entered into the “BORROWER 2” section, as Sally’s address is the same as Bob’s address.




11. Amount Financed – $36,477.13 This amount includes the $36,077.13 for the vehicle (Purchase Price of $46,077.13 MINUS Down

payment of $10,000 EQUALS Amount Due of $36,077.13) plus $400.00 for GAP coverage. Note, Bob and Sally paid the $15.00 filing fee in cash.

12. Total of Payments – $41,850.86 This amount equals the sum of all of the payments listed in the “Your Payment Schedule will be:”

section below. Since the cost of Debt Protection was included in the amount disclosed in the “Your Payment Schedule will be:” section, it must also be included in the Total of Payments. When monthly Debt Protection is included in the payment, the finance charge plus the amount financed will not equal the total of payments.

13. Filing Fees – $15.00 In this example, the filing fee was paid in cash.



15. Amount of Payments – The payments include the cost of Debt Protection.

16. When Payment Are Due – In this example we completed this sentence as follows:

“When Payments Are Due: Payments will be due MONTHLY beginning on the 15th day of each month beginning 04/15/2012. Your last payment will be due on 03/15/2018.

17. Debt Protection – The final cost of Debt Protection ($821.61 for Transitional Life) is disclosed here and is based on the final loan amount.

18. Guaranteed Asset Protection – $400.00

19. Extended Warranty – N/A Since the member did not take the Exended Warranty, N/A is disclosed here.


Sample 3

Pre-Approved Vehicle Loan Scenario:Individual pre-approved vehicle purchase without Debt Protection, but with Extended Warranty (MRC) and Filing Fee.

Details:Shirley Jones is interested in purchasing a used vehicle and financing a loan for that vehicle with ABC Federal Credit Union.

After submitting a loan application to the Credit Union on March 1st, Shirley was pre-approved for up to $36,000 to purchase a vehicle from a Dealer.

Shirley is not certain which vehicle she will purchase, however she does know that she only wants to look at used vehicles in an effort to keep her payments lower. ABC Federal Credit Union offers two Loan Types for used vehicles.

The first is called “2011 only” (vehicle that is a 2011 model year) has an interest rate of 3.75% with a term of 60 months.

The second is called “2010 to 2008” (vehicle that is a 2010 to 2008 model year) has an interest rate of 4.75% with a term of 48 months.

There is a $10.00 filing fee which Shirley will finance into the loan.

Shirley chose not to elect Debt Protection.

Shirley wants to purchase Extended Warranty Coverage known as Mechanical Repair Coverage (MRC) which she will finance into the loan. The cost of MRC will be unknown until Shirley purchases the vehicle as the cost of MRC is based on characteristics of the vehicle such as Make, Model, Year, Mileage, etc.

On March 16th, 2012, Shirley purchased a 2009 Chevy Malibu from Anytown USA Auto Sales for $17,721.96 which includes the sale price, tax, license, and all other vehicle fees.

Shirley, and her Dealer, Monte Hall Jr., completed and signed the Pre-approved Express Draft (Site Draft) (from now on referred to as the Express Draft) on March 16th, 2012. Once the Express Draft was completed and signed, Monte faxed to the Credit Union the completed and signed Express Draft, a copy of the purchase order for the Malibu, a copy of the application for title showing ABC Federal Credit Union as the lien holder, and the NADA Value print off.

After reviewing the documents faxed in by Monte, the Credit Union was able to book the loan into their system and also fund the loan on March 17th, 2012.



Sample 3

LOAN TYPE

NXX232-e




NAME AND ADDRESS





Amount Financed

$




$






Late Charge:$

Filing Fees$


%


$








ToTo$





DATE

15th

2

1

4

7

5 6

16

9 10 11 12

1514

17 18

19

20

13

8

3

a b

c d


03/01/2012

Shirley Jones987 Any St.Anytown, USA 12345

N/A

111222

2011 only

3.75


36,000.00

33,990.00 10.00

2,000.00 Insurance Company

N/A

59 659.97 e 1 659.88 e

3,598.11 e 36,000.00 e

N/A

Monthly 30

10.00 N/A

39,598.11 e

98777 00-01122 123-4567-8

SAMPLE #3

State Agency*











21 2011 only2010 to 2008

3.754.75

You agree to pay all costs of collecting the amount you owe under this Agreement, including court costs and reasonable attorney fees.

ABC Federal Credit Union 111222 00-01122Shirley Jones N/A








ABC Federal Credit Union 111222 00-01122Shirley Jones N/A




2. Date – 03/01/2012, the date the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosure was prepared and delivered to Shirley.

3. Loan Number – 111222, the number the Credit Union assigned to Shirley’s loan.


5. Account Number – 00-01122, which is Shirley’s member number.


7. Borrower(s) Name and Address – Shirley’s full name and address were entered in this section. N/A was entered into the “BORROWER 2” section, as Shirley requested an individual loan.

8. Loan Type – 2011 only In this example, the Credit Union presented the borrower with two Loan Types. This document

discloses the first Loan Type, “2011 only.” The other will appear on a Truth in Lending Disclosure (Pre-Approved) document.



10. Finance Charge – $3,598.11 e This is the dollar amount of a contract rate of 3.75% for 60 months. We used an “e” for estimate

beside this amount as it is an estimate based on the maximum approved loan amount of $36,000.

11. Amount Financed – $36,000 e This is the maximum approved loan amount. Shirley is using this amount not only to purchase

the vehicle, but also to finance the cost of the filing fees ($10.00) and the cost of Extended Warranty called Mechanical Repair Coverage (MRC) estimated at $2,000. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.


be:” section below. Since Shirley did not elect Debt Protection, the cost of the coverage was not included in the amount disclosed in the “Your Payment Schedule will be:” section and thus will not be included in the Total of Payments. When monthly Debt Protection is included in the payment, the finance charge plus the amount financed will not equal the total of payments. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

13. Property Insurance – N/A In this example the Credit Union doesn’t offer insurance.


14. Filing Fee – $10.00 In this example, the filing fee is financed into the loan. Since this is a known amount that will not


15. Non-Filing Insurance – N/A. In this example, the Credit Union does not have non-filing insurance.



18. Amount of Payments – In this example the payments do not include the cost of Debt Protection. The amount of each set of payments was based on the maximum approved loan amount of $36,000, therefore we used “e” for estimate.







c. $33,990.00 – The amount of the funds sent to the Dealer.

d. $2,000* – The cost of the Mechanical Repair coverage with an asterisk to indicate that the Credit Union is retaining a portion of this amount.

e. $10.00 – the cost of the filing fee, all of which is sent to the State Department of Motor Vehicles.

21. Promise to Pay – For this example, the Loan Types of “2011 only” and “2010 to 2008” and their corresponding interest rates of 3.75% and 4.75% respectively, were disclosed.



Sample 3

NXX332-e




NAME AND ADDRESS




Amount Financed

$ $






Late Charge:$

Filing Fees$


%


$




LOAN TYPE








21 4 5

7

6

9 10 11

13 14

18

15

16 17

8

3

12

03/01/2012


N/A

111222

2010 to 2008

4.75


47 826.60 e 1 826.25 e

3,676.45 e

Monthly 15th 30

36,000.00 e

N/A 10.00 N/A

39,676.45 e

98777 00-01122 123-4567-8

SAMPLE #3



Explanation of Sample:1. Date – 03/01/2012, the date the Pre-Approved Loan and Security Agreement and Truth in

Lending Disclosure was prepared and delivered to Shirley.






7. Loan Type – 2010 to 2008 In this example, the Credit Union presented the borrower with two Loan Types. This document

discloses the second Loan Type, “2010 to 2008”





10. Amount Financed – $36,000 e This is the maximum approved loan amount. Shirley is using this amount not only to purchase

the vehicle, but also to finance the cost of the filing fees ($10.00) and the cost of Extended Warranty called Mechanical Repair Coverage (MRC) estimated at $2,000. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.


be:” section below. Since Shirley did not elect Debt Protection, the cost of the coverage was not included in the amount disclosed in the “Your Payment Schedule will be:” section and thus will not be included in the Total of Payments. When monthly Debt Protection is included in the payment, the finance charge plus the amount financed will not equal the total of payments. We used “e” for estimate beside this amount as it is an estimate based on the maximum approved loan amount.

12. Property Insurance – N/A In this example the Credit Union doesn’t offer insurance.

13. Filing Fee – $10.00 In this example, the filing fee is financed in to the loan. Since this is a known amount that will not



14. Non-Filing Insurance – N/A. In this example, the Credit Union does not have non-filing insurance.



17. Amount of Payments – In this example the payments do not include the cost of Debt Protection. The amount of each set of payments was based on the maximum approved loan amount of $36,000, therefore we used “e” for estimate.





Sample 3

NXX731-e





Dollars

Security Offered:

X

$


Amount in Words



Amount in Numbers


X



















SIGNATURES



DATE

X


Account Number:Borrower 1 Name and Address: Borrower 2 Name and Address:Credit Union Contact: Telephone:3

4 5 6

11

10

15

7

12

1716

2

9

14

1

8

13

18 19

21

22

20

2324Monte Hall, Jr. 03/16/2012Monte Hall, Jr. 231-231-9999

Shirley Jones


00-01122 N/A


2011 Only: 2011 model year vehicle.2010 to 2008: 2010, 2009, or 2008 model year vehicle.

(231) 231-2312

(231) 231-1111

03/01/2012 04/01/2012

Anytown USA Auto Sales33,990.00

98777

Sue Smith

SAMPLE #3

2011 Only2010 to 2008

2010 to 2008ABC Federal Credit Union

17,721.96

2009 Chevy Malibu 4 door 98758462B2C3D4218

Seventeen thousand seven hundred twenty-one and 96/100

Shirley Jones 03/16/2012

ABC Federal Credit Union123 Credit Union StreetAnytown, USA 12345Electronic Lien Title Code: 135791113


Explanation of Sample:Items completed by Credit Union prior to issuing the Express Draft: 1-8, 13-16 & 22

Items completed by Shirley Jones (Borrower) or Monte Hall Jr. (Dealer): 12, 17-22, 23 & 24

1. Express Draft Number – 98777 In this example the Express Draft Number is 98777 which was the next available number on the

list of Express Draft Numbers created by the Credit Union.

2. Credit Union Contact – Sue Smith In this example, Sue Smith, Loan Officer, is the individual at the Credit Union who should be


3. Telephone Number – (231) 231-2312 This is Sue Smith’s direct line at the Credit Union.

4. Borrower 1 Name and Address – Shirley’s full name and address were entered in this section.


6. Borrower 2 Name and Address – N/A was entered as Shirley requested an individual loan

7. Loan Types – In this example, the Credit Union presented the borrower with two Loan Types: 2011 only and 2010 to 2008.

8. Approved Limit – The Credit Union noted that the total of the vehicle purchase price, taxes, fees and other charges cannot exceed the Approved Limit.

9. Vehicle Qualifications – In this example, Shirley may purchase a used vehicle; either a 2011 model year vehicle which would fall into the “2011 only” Loan Type, or a 2010, 2009, or 2008 model year vehicle which would fall into the “2010 to 2008” Loan Type.

10. Fax Number – (231) 231-1111 This is the fax number the Credit Union would like all of the documentation to be sent to.

11. Lien Recording – The Credit Union provided their name, address and Electronic Lien Title Code information.

12. Loan Type – 2010 to 2008 Since Shirley purchased a 2009 Chevy Malibu, Monte Hall Jr., the car Dealer helping Shirley,

wrote in “2010 to 2008” to indicate the correct Loan Type.



15. Approved Limit – $33,990.00 In this example, the member’s Approved Limit is $33,990.00. This amount represents the

$36,000 pre-approved loan amount, less the $2,000.00 for MRC and the $10.00 Filing Fee both of which Shirley told the Credit Union she wanted to finance. This ensures that the borrower does not exceed the $36,000 pre-approved loan amount when purchasing a vehicle.

16. Credit Union – The Credit Union completed their name prior to giving this document to the member.


17. Will Pay To: (Dealer) – Monte Hall Jr. wrote in the name of his Dealership, Anytown USA Auto Sales, where Shirley purchased her Malibu.

18. Amount in Numbers – The final cost of the vehicle including all taxes, fees, and license was written in by Monte as $17,721.96.



21. Borrower(s) Signatures – Shirley Jones signed and dated here once the document was fully completed.

22. Borrower(s) Name – Shirley Jones was printed here by the Credit Union.

23. Name of Authorized Representative of Dealer – Monte Hall Jr., the Dealer who handled the transaction for Shirley, printed his name and provided a phone number where the Credit Union could contact him with any questions.

24. Authorized Representative of Dealer Signature and Date – Monte signed and dated the completed Express Draft.



Sample 3


Finance Charge

%

Amount Financed

$ $


$

Total of Payments



REPAYMENT TERMS




Debt Protection(option chosen)

$


BORROWER 2



Filing Fees

$

LOAN DATE



Extended Warranty$


$ N/A

7

11 13

4

8

12

3 6

10

2

1

5

9

16

14 15



17 18

19

SAMPLE #3


2010 to 2008 03/17/2012 111222 98777 00-01122


N/A

4.75 1,956.75 18,781.96

Monthly 15th 05/15/201204/15/2016

20,738.71 10.00

471

432.06431.89

N/A

1,050.00



1. Borrower(s) Name and Address (window envelope) – Since ABC Federal Credit Union uses window envelopes, Shirley Jones name and address was printed here.

2. Message from Credit Union – ABC Federal Credit Union used this space to congratulate Shirley on her vehicle purchase, to notify her that she will be receiving a coupon book, and to request that she send in a copy of her verification of insurance coverage.

3. Loan Type – 2010 to 2008 In this example, the Credit Union listed “2010 to 2008” which corresponds to the Loan Type

Shirley selected by purchasing the 2009 Chevy Malibu.

4. Loan Date – 03/17/2012


6. Express Draft Number – 98777 This is the number that was assigned to the Express Draft






11. Amount Financed – $18,781.96 This amount includes the $17,721.96 for the vehicle plus $1,050.00 for MRC coverage, and the

$10.00 filing fee.

12. Total of Payments – $20,738.71 This amount equals the sum of all of the payments listed in the “Your Payment Schedule will

be:” section below. Since Shirley did not elect Debt Protection, the cost of the coverage was not included in the amount disclosed in the “Your Payment Schedule will be:” section and thus will not be included in the Total of Payments. When monthly Debt Protection is included in the payment, the finance charge plus the amount financed will not equal the total of payments.

13. Filing Fee – $10.00 In this example, the filing fee is financed in to the loan.


15. Amount of Payments – The payments do not include the cost of Debt Protection because it was not elected.


16. When Payment Are Due – In this example we completed this sentence as follows: “When Payments Are Due: Payments will be due MONTHLY beginning on the 15th day of each

month beginning 05/15/2012. Your last payment will be due on 04/15/2016.

Note that since Shirley’s loan date was less than 30 days before April 15th, the first payment was moved to May 15th, in accordance with the “When Payments Are Due” language from the Pre-Approved Loan and Security Agreement and Truth in Lending Disclosures Statement.

17. Debt Protection – N/A No Debt Protection was elected.

18. Guaranteed Asset Protection – N/A Since the member did not take the GAP coverage, N/A is disclosed here.

19. Extended Warranty – $1,050.00

This represents the final cost of the Extended Warranty Coverage called Mechanical Repair Coverage (MRC). This amount is less than the original amount disclosed of $2,000 since that amount was based on a vehicle valued at $33,990.00.


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