[Cindy]

We currently have coupon books for our car loans. We would like to do away with the coupons. What is required to do away with these and can we charge a fee for providing the coupon book at the customers request? Would we need to provide a monthly statement?

Topic

[Kimberly Boatwright, CAMS, CRCM]

Choosing to provide a coupon book is a business decision. If your FI is choosing to not provide these in the future you will just need to determine the date you will eliminate the practice and use that date as your go forward standard. Things to consider:
1. You can charge for the book if you have customers who would like one. However, you will not want to use it as a fee income opportunity. To avoid any potential UDAAP issues, the fee needs to be reasonable. IMO, reasonable will be the cost to the bank is passed off to your customer. If lenders are allowed to waive fees, this will be another one you will need to track and monitor to ensure customers are being treated the same.
2. Monthly statement for car loans – there is no regulatory requirement that FIs send out periodic statements for this type of loan. So not offering coupon books will not change the practice you are using today. There are FIs that do send out periodic statements on installment loans, however it is a business decision.

Best,
Kimberly

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[Cindy]

Thank you, this is very helpful!

[jholzknecht]

Generally state law does not require use of a coupon book. But you should check your state law. Also, if you are providing monthly statements, check state law regarding any required content.

Also review the content of your existing note form. Does the contract state that you will provide coupon books? If so, getting rid of the coupon books might be more of an issue.

[Cindy]

Thank you Jack, I will check the content of our current Note and state law as well.

[Author]

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