Compliance notes for indirect auto lending (dealer-facing)
Indirect lending can introduce fair lending and compliance risk, especially around pricing discretion, documentation standards, and exceptions. This is a high-level operational checklist (not legal advice).
Key themes
- Consistency beats creativity in pricing and exceptions.
- Document your reasons when you deviate from standard policies.
- Train your team and audit the output—not just the intent.
Operational controls dealers should consider
- Written pricing/participation policy: define caps, when exceptions are allowed, and who approves them.
- Exception log: capture the rationale, approval, and supporting documents.
- Uniform stip checklist: reduce “selective documentation” risk and funding delays.
- QA review: sample deals weekly to catch drift early.
- Training: refresh on disclosures, product presentation, and documentation standards.
Reference (regulatory background)
Background materials exist on how indirect lending structures work and how pricing discretion can create risk. These references are informational only.
Dealer compliance notes by state — indirect lending
Every state has different compliance requirements that affect indirect dealer agreements. The most common areas that lead to lender chargebacks or agreement termination are doc fee cap violations, title submission delays, and Reg Z APR disclosure errors.
| State | Doc fee cap | Title deadline | Key compliance notes |
|---|---|---|---|
| California | $85 doc fee cap | 10 days | CDTFA sales tax reporting, CLRA, Rosenthal Act, CA DFI dealer audits |
| Texas | $150/$225 safe harbor (OCCC) | No state deadline; OCCC tracks buyer tag logs | OCCC license required for all dealers; TxDMV buyer tag audit compliance |
| Florida | No cap (avg $800+) | 30 days to HSMV | HSMV temp tag audit; 30-day title rule is the #1 chargeback trigger in FL |
| New York | $175 cap | 20 days | MCTMT overlay for NYC metro; active AG bureau; strictest lender compliance state |
| Illinois | ~$347 indexed cap | No hard window; 21-day reinstatement | 21-day right-to-cure; indexed doc fee adjusts annually by CPI |
| Georgia | No cap | 30 days | TAVT 6.6% on DOR value (not sale price) — deal jacket must correctly document TAVT vs. sales tax |
| North Carolina | No cap | No hard window | 3% HUT cap at $2,000 — must use NC-specific retail installment contract form, not standard sales tax language |
| Ohio | $250 cap | 30 days | 20-day reinstatement right; $250 cap applies to all dealers statewide |
| Minnesota | $125 cap | 10 days | 10-day title window is the tightest in the US alongside CA; late submissions trigger lender exceptions |
| Wisconsin | $299 cap | No hard window; 5-yr retention | 15-day right-to-cure before repossession; 15-day notice before sale; $165 title fee |
| Oregon | No cap | No hard window | No sales tax; $106 title fee; DPSST licensing for repo agents |
| Louisiana | $425 cap | No hard window | Civil law jurisdiction; LMVC enforcement; Louisiana-specific RIC forms required |
This table covers the states with the most significant compliance differences. All states require Reg Z-compliant APR disclosure in retail installment contracts. Consult your state's DMV and your compliance counsel before finalizing dealer agreements with indirect lenders.