English: 8-Hour License Renewal Auto Dealer Course
Statute Details Concerning Financing
assessment
Existing Dealers
(1) Notwithstanding the provisions of any other law, the finance charge, exclusive of insurance, shall not exceed the following rates:
Class 1. Any new motor vehicle designated by the manufacturer by a year model not earlier than the year in which the sale is made—$10 per $100 per year.
Class 2. Any new motor vehicle not in Class 1 and any used motor vehicle designated by the manufacturer by a year model of the same or not more than 2 years prior to the year in which the sale is made—$11 per $100 per year.
Class 3. Any used motor vehicle not in Class 2 and designated by the manufacturer by a year model not more than 4 years prior to the year in which the sale is made—$15 per $100 per year.
Class 4. Any used motor vehicle not in Class 2 or Class 3 and designated by the manufacturer by a year model more than 4 years prior to the year in which the sale is made—$17 per $100 per year.
The preceding section outlined the maximum finance charge limitations. Please note that the minimum finance charge limit for a retail installment transaction is $25. Do not confuse maximum statutory limitations with maximum annual percentage rate (APR). Let’s illustrate an example using the Class 4 limitation of $17 per $100.
Example: A dealer finances a class 4 vehicle at the maximum limitation allowed by law of $17 per $100. The amount of the loan is $20,000 on a 4 year term. This means that the dealer can charge $17 per $100 financed ($17 per $100 X 4 years). Based on this example, the total maximum finance charge allowed is $13,600. The total amount to be repaid will be $33,600. The customer will then be required to make monthly payments of $700.00 ($33,600/48 month). The annual percentage rate is 28.26%. Most finance software programs will calculate the APR.
Microsoft excel can also help you calculate the APR: on the top section paste the following Formula, =RATE(48,-700,20000,0)*12
((Nper)how many months,(Pmt)-monthly payment,(Pv) amount financed,(Fv) future value)*months in a year
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Course
English: 8-Hour License Renewal Auto Dealer Course
Author
Joaquin Jimenez
Instructor
