What are California Financing Disclosures?
Starting on December 9th, 2022, California is requiring customers to sign financing acknowledgments any time they engage with a third-party lender (like LeafLink) to increase transparency. While LeafLink has always provided users with the information required in this regulatory update, it is now consolidated and downloadable to create a streamlined agreement for your records.
What will this look like?
All Flexible Payments invoices in California will now include a clickable hyperlink to view the financing disclosure for each invoice, as well as a legal disclosure notifying the user that they will be accepting financing terms when paying a financing fee. While this update will change the appearance of your experience slightly, there has been no change to how LeafLink handles financing or invoice processing.
What do the fields in the financing disclosure mean?
- Funding Provided: The amount of funding LeafLink is providing your organization, or the total amount of the invoice(s) being processed.
- Estimated Annual Percentage Rate (APR): APR is the cost of your financing, shown as an annual rate. This is typically used to express interest costs over the course of a year.
- Note: Does this number seem higher than you expected? That’s because California requires this number to be calculated as an annual rate. Since LeafLink is only providing short-term funding, rates never occur over a year-long period, making a net terms rate of a few percentage points appear much higher in this field.
- Finance Charge: How much your financing costs in dollars, or the amount paid on top of the invoice to unlock net terms.
- Payment Frequency: How often you will need to pay LeafLink to pay off this funding. Since LeafLink is a short-term lender and customers pay the full amount upon term completion, this field isn’t applicable.
- Estimated Term: How long the buyer has to pay for this invoice, or the net term length.
- Repurchase Costs: The amount that a customer could repurchase the financing agreement from LeafLink after the agreement is made. Since LeafLink only offers short-term financing, agreements cannot be repurchased, making this inapplicable.
How can I access disclosures from previous orders?
All disclosures from applicable invoices can be found in the invoice details for future reference. This way, you can maintain your records and access all financing disclosures seamlessly without needing to store them offline.
My invoice had its rate adjusted from the original amount. Is there anything I need to do with my disclosure?
If your invoice’s rate is adjusted to increase APR by LeafLink’s servicing team, you will need to re-assign the invoice in Payments from its Eligible status in order to accept an updated version of the disclosure. This new disclosure will now live in the invoice details.