Robert Gage, a Michigan partner for Hudson Cook LLP, told Automotive News the Davidson decision should give auto financers more confidence they can continue to finance the coverage in auto loans with the law’s covered borrowers. Gage frequently represents consumer auto finance lenders on matters of regulatory compliance, including the Military Lending Act.
“This has been a bit of a game of ping-pong,” Gage said of the long legal battle. “There’s been this constant back-and-forth of whether we can or can’t include [guaranteed asset protection] in these transactions. Davidson is giving us more certainty that we can, and that is less likely to change in the future.”
Davidson sued United Auto of Fort Worth, Texas, alleging the lender did not provide the proper law disclosures and credit-related costs when the loan for his used GMC Acadia was originated in 2018.
Lawyers for defendant United Auto had argued the lower court correctly ruled under the “plain language” of the statute. The guaranteed asset protection loan was secured by the car and was for the purpose of financing it.
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