In Isenbergh v. S. Chi. Nissan, 2020 IL App (1st) 190849-U, ¶¶ 43-49, the Illinois Court of Appeal found no TILA violation in a vehicle sale transaction.
Plaintiff further contends that the circuit court erroneously rejected his claim that South Chicago did not make the disclosures required under the TILA. The TILA “is not a general prohibition of fraud in consumer transactions [**21] or even in consumer credit transactions.” Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 285 (7th Cir. 1997). Rather, the TILA was enacted simply to “assure a meaningful disclosure of credit terms so that the consumer will be able to *** avoid the uninformed use of credit.” 15 U.S.C. § 1601 (2006). Pursuant to the broad the authority delegated by Congress (15 U.S.C. § 1604 (2006)), the Federal Reserve Board has promulgated a comprehensive set of rules, known as Regulation Z, to effectuate the TILA‘s purposes. 12 C.F.R. § 226 (1981); Lanier Associates Finance, Inc., 114 Ill. 2d 1, 11 (1986). Relevant here, Regulation Z requires a seller to make five material disclosures to ensure that consumers understand the true cost of purchasing items on credit, rather than in cash: (1) the “amount financed,” (2) the “finance charge,” (3) the annual percentage rate, (4) the payment schedule, and (5) the total of payments. 12 C.F.R. § 226 (1981). Here, the Temporary Car contract explicitly identified the “Amount Financed” as $28,115.19, the “Finance Charge” as $11,647.53, and, consequently, the “Total of Payments” as $39,762.72. The amount financed was clearly calculated by adding and subtracting certain itemized fees, taxes, and deductions from the listed “Cash Price” of $26,141.00. The contract also identifies the annual percentage rate as 11.99% and the payment schedule as 72 monthly payments of $552.26 beginning on February 24, 2008. Accordingly, the contract makes all the disclosures required under the TILA and Regulation Z. Plaintiff, however, argues that South Chicago hid the true finance charge (and, by extension, the true annual percentage rate) by falsely inflating the cash price of the Temporary Car. Regulation Z defines “finance charge” as “the cost of consumer credit as a dollar amount.” 12 C.F.R. § 226.4(a) (2006). It is the sum of charges “imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit.” Id. However, the finance charge does not include “any charge of a type payable in a comparable cash transaction.” Id. Stated differently, the finance charge is essentially the difference between what the customer actually pays by financing the item and what they would have paid had they paid cash (i.e. the cash price). The key to plaintiff’s argument is his contention that the true cash price of the Temporary Car was its MSRP, which he says was $15,980. In support of this position, plaintiff observes that “cash price” is defined in Regulation Z as “the price at which a creditor, in the ordinary course of business, offers to sell for cash the property or service that is the subject of the transaction.” See 12 C.F.R. § 226.2 (2006). From this definition, plaintiff concludes that the cash price of a vehicle is equivalent to its MSRP because that price is what a dealer would charge in the ordinary course of business. Plaintiff’s interpretation is incongruous with the clear purpose of the TILA, which is to inform consumers of the actual costs of purchasing with credit rather than cash in a particular transaction. His interpretation also ignores the fact that the price of a vehicle, unlike many other consumer goods purchased on credit, is subject to substantial negotiation such that two given customers might agree to pay different amounts for identical vehicles. Simply put, nothing in the record suggests that South Chicago offered to sell plaintiff the Temporary Car for $15,980 cash. Instead, the record shows that the parties negotiated the terms of the Temporary Car contract, including the cash price, and that plaintiff signed the contract with full knowledge and understanding of the terms. Indeed, plaintiff testified at his deposition that he “looked most importantly at the monthly payment” during the negotiations, and agreed to the contract terms because they were “designed to generate a monthly payment of about $550 which was an agreed upon amount between [he] and [South Chicago].” While plaintiff could have perhaps negotiated a lower cash price, his failure to do so does not mean that South Chicago violated the TILA. Furthermore, the three cases upon which plaintiff relies are distinguishable, as they all involved situations in which consumers were unknowingly charged amounts for using credit that they would not have been had they paid in cash. See Walker v. Wallace Auto Sales, Inc., 155 F.3d 927, 932 (7th Cir. 1998); Gibson, 112 F.3d at 287; Taylor v. Bob O’Connor Ford, Inc., No. 97 C 0720, 1998 WL 177689, at * 7 (N.D. Ill. Apr. 13, 1998). In contrast, plaintiff does not allege that he was charged more because he paid in credit rather than in cash, but only that a hypothetical purchaser could have negotiated a cash deal for the MSRP. However, “[i]f a dealer merely charges what the traffic will bear, the fact that a particular credit customer may be paying a higher markup than a particular cash customer would not transform the difference in mark-ups into a finance charge” because “it would have in fact no causal relation to the extension of credit.” Gibson, 112 F.3d at 286. Accordingly, the circuit court did not err in granting summary judgment for South Chicago on plaintiff’s TILA claim.