Must a dealer who is the original creditor provide a Risk Based Pricing Notice or Exception Notice?

A dealer who is the original creditor must provide a Risk Based Pricing Notice or Exception Notice when they extend credit terms to a consumer. This requirement is in place to ensure that consumers are informed about the terms of credit based on their credit risk.

The Risk Based Pricing Notice is necessary when a creditor uses a credit report to determine that the consumer is being offered less favorable credit terms than other consumers due to their credit history. This transparency helps consumers understand why they are receiving different terms compared to others, which is important for fostering trust and informed financial decisions.

Additionally, if the dealer determines that the consumer qualifies for better terms than what is being offered based on their credit score, they must provide an Exception Notice, indicating the higher terms that they might qualify for. Providing these notices aligns with regulations designed to protect consumers and promote fair lending practices, which underscores the importance of their role in the credit transaction process.