Security National Automotive Acceptance Co. is one of the first lenders to adhere to revised regulations from the Department of Defense through a new compliance program, Auto Finance News has learned.
In December, the DoD clarified that servicemembers seeking GAP policies are subject to the Military Lending Act (MLA). As a result, many dealers stopped offering GAP policies — and lenders limited funding GAP — to those borrowers. Because SNAAC exclusively lends to servicemembers, it added written disclosures, trained dealers to deliver verbal disclosures, and provided specialized calculators to dealers for analyzing interest rates.
“Military lending is our business, so when the regulations changed, we wanted to make sure we were compliant,” Grant Skeens, president and chief executive, told AFN. “From a systems perspective, we’re highly efficient at making necessary changes and adapting our processes quickly.”
The MLA requires that servicemembers’ military annual percentage rate (MAPR) — which is a combination of the regular APR plus ancillary products and added fees — sits below 36%.
There is a legal debate over whether the DoD’s revision made it so that a lender can’t legally repossess the vehicle, but Bob Bender, SNAAC’s vice president of compliance, is confident that rule in question only applies to title lending. “In many cases, dealers have refused to sell GAP to people in the military,” Skeens said. “We think that is a bad decision on their part.”
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