Chapter 12 The Loan and the Consumer

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Chapter 12The Loan and the Consumer

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Regulation Z

• Truth-in-Lending Act
• Requires lender to show the borrower the cost of
  the credit.
• Requirements include
• Amount financed
• Finance charge
• Annual percentage rate
• Total payments

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APR

• Annual percentage rate combines the interest rate
  with the other costs of the loan into a single
  figure that shows the true annual cost of the
  loan.

4
Right to Rescission

• Borrowers right to cancel a credit transaction.
• Three business days after signing to back out.
• Includes Saturdays.
• Does not apply to credit used for the acquisition
  or initial construction of your principal
  dwelling.

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Triggering Items and Disclosures
Mention these
Triggers disclosure

• Down payment
• Any payment
• Number of payments
• Period of payments
• Amount of any finance charge, or statement
  no charge for credit

• Cash price or the amount of the loan
• Down payment (or none)
• Number, amount, frequency of payments
• Annual percentage rate (APR)
• Deferred payment price or total payments

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Loan Process
Lenders Qualify

• Borrower
• Property
• Title

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Redlining

• Refusing to make loans in certain areas.

No Loans!