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What is an Arranger of Credit? A Comprehensive Legal Overview
Definition & Meaning
An arranger of credit is a person or entity that regularly facilitates the extension of consumer credit under specific conditions. This includes situations where:
A finance charge is imposed.
There are more than four payment installments.
The credit provider is not classified as a creditor.
It is important to note that real estate brokers who arrange seller financing for properties are not considered arrangers of credit. Under the Truth-in-Lending Act and Regulation Z, arrangers of credit are recognized as creditors, which means they have certain responsibilities and obligations when facilitating credit.
Table of content
Legal Use & context
The term "arranger of credit" is commonly used in consumer finance law. It applies to individuals or businesses that help consumers obtain loans or credit from lenders. This role is significant in various legal contexts, including:
Consumer protection laws, which aim to ensure fair lending practices.
Financial regulations that govern how credit is extended and disclosed to consumers.
Users can manage some aspects of credit arrangements themselves using legal templates from US Legal Forms, which provide resources drafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A car dealership assists customers in obtaining financing for vehicle purchases. If the dealership prepares loan documents and knows the terms set by the financing company, it acts as an arranger of credit.
Example 2: A retail store offers installment plans for customers to purchase goods, charging interest and allowing more than four payments. In this case, the store is also an arranger of credit. (hypothetical example)
Relevant laws & statutes
The primary statutes governing arrangers of credit include:
Truth-in-Lending Act: This federal law mandates clear disclosure of credit terms to consumers.
Regulation Z: This regulation implements the Truth-in-Lending Act, defining the responsibilities of creditors and arrangers of credit.
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Specific licensing requirements for credit arrangers.
Texas
Unique regulations on installment sales and credit disclosures.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Creditor
A person or entity that extends credit directly to consumers.
Creditors provide the funds, while arrangers facilitate access to credit.
Broker
A person who connects buyers and sellers in transactions.
Brokers typically do not extend credit themselves.
Common misunderstandings
What to do if this term applies to you
If you find yourself involved with an arranger of credit, consider the following steps:
Review the terms of the credit arrangement carefully.
Ensure you understand your rights under the Truth-in-Lending Act.
Consult legal resources or templates available through US Legal Forms to help manage your situation effectively.
If the matter is complex, seek advice from a qualified legal professional.
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