Banking Experts Investigate Car Dealership Financing Dispute

This case involves a class action lawsuit against a car dealer. It was alleged that the defendant was improperly charging interest from the date of purchase and not from the date of financing. This allegedly resulted in a period of ten weeks during which the defendant was charging interest to dealerships but had not advanced any money on their behalf. An expert with extensive industry knowledge and experience working with lenders or auctions was sought to explain how this kind of financing typically works.

Question(s) For Expert Witness

1. Please describe your background in similar agreements.

2. At what point should an auto financing company start charging interest?

Expert Witness Response E-089191

My initial thought is that financing commences when funds are disbursed. Typically in floorplan finance, this is when the bank or financing source receives the file from the manufacturer noting the vehicles to be shipped to the dealer and requesting funding under their agreement between the bank, the borrower and the manufacturer. The agreement typically governs when funds disbursed via wire or ACH and that is normally when the interest clock starts running. This can be the same day as the advice of charge or floorplan notice is received, or it can be post-dated. It's dependent on the language in the agreement.