New state disclosure regulations loom for lenders
Lenders are increasingly looking for ways to comply with looming state regulations.
California, New York and Utah all have commercial finance disclosure laws active or pending that will give more insight into the largely opaque lending industry.
While the legislation mainly targets payday lenders, the equipment finance industry is also in the crosshairs, Lisa Whitehead, a certified lease and finance professional, told Equipment Finance News.
Until now, the equipment finance industry has largely self-regulated, Whitehead said at the second annual National Equipment Finance Association spring conference in Huntington Beach, Calif., this week.
The equipment financing industry, meanwhile, argues that the added administrative burden of the disclosures is unnecessary. Industry trade groups including The Equipment Leasing and Finance Association (ELFA) say the statewide regulations are a challenge on top of federal requirements under Section 1071 of the Dodd-Frank Act.
Lenders also remain concerned about new mandates to disclose interest rates. Many are considering flexible financing offerings that allow them to remain in compliance with the law while avoiding disclosure whenever possible, a topic discussed during a NEFA conference panel March 27.
The focus on rate transparency and disclosure within the industry seems to be a regulatory reaction to consumer payday loans, not because the equipment finance industry is predatory, Whitehead said.
“When you’re talking about equipment financing [such as] a loan or a lease, you’re not talking rate,” Whitehead said. “It isn’t sold on rate.”
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