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What is the TIL Definition Of A Credit Sale?

Answered by: 
Richard Insley

Question: 
I need the definition of credit sale under Truth in Lending. A piece of ORE property is sold to a customer for x dollars, he pays us with proceeds of a loan he took out secured by a vehicle. Would we need the sales contract disclosure using the 5th box or not? We are not financing the property since the collateral is the vehicle?
Answer: 

12 CFR Part 226.2(a)(16): "Credit sale means a sale in which the seller is a creditor." A literal reading of the definition (OSC doesn't add anything) leaves you scratching your head & guessing you might be covered. The requirements of Section 226.18(j), seem to envision only the classic credit sale transaction (auto dealer, for example). This is a gray area & you could go either way, but I'd keep it simple & just treat it as an ordinary loan, not a credit sale.

First published on BankersOnline.com 05/5/03

First published on 05/05/2003

Filed under: 
Lending
Filed under lending as: 
Collateral

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