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Yes, to prepare sale documents.

The Alabama Consumer Credit Act, Ala. Code §§ 5-19-1 et seq. ("Mini-Code"), authorizes a creditor to contract for a rate on the balance and specified fees. The Attorney General's office has taken the position that a creditor may not charge a fee unless the fee is authorized by the Mini-Code or another Alabama statute. This database takes the position that other fees are not permitted unless expressly authorized by a statute, the Attorney General or the Alabama Banking Department, Bureau of Loans ("Banking Department").

Neither the Mini-Code, another Alabama statute, the Attorney General nor the Banking Department has authorized a creditor to contract for a fee to prepare documents related to the credit transaction.

However, the Banking Department has taken the position that a creditor may charge a document preparation fee if the creditor charges the fee consistently on both cash and credit transactions, because the fee is not a finance charge under the Mini-Code or the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. ("TILA"). December 2007 Banking Department Letter. The Banking Department offered the following analysis:

"Although different dealers may identify fees by different names, including document preparation fee, delivery fee, administrative fee and processing fee (commonly referred to as "Document Preparation" or "Doc Fees"), each fee is intended to offset some of the costs the dealer incurs in making the sale or lease and/or preparing the vehicle for delivery to the buyer, and may include profit for the dealer. You have indicated that members of the ADAA typically charge such fees consistently to all buyers, regardless of whether the buyer pays for the vehicle with cash or credit.

"Because such fees are charged consistently on all cash and credit sales, then they are not a Finance Charge under Regulation Z and TILA or the Mini-Code. Neither the Mini-Code nor any other provisions of the Code of Alabama prohibits a creditor from charging fees not constituting Finance Charges."

As a result, a creditor may charge a document preparation fee to prepare sale documents or to prepare the vehicle for delivery if the creditor charges the fee consistently on both cash and credit transactions.

July 13, 2018   Show Redlined Changes