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Question & Answer
Question: For loans that are subject to rescission, our bank charges interest beginning after the rescission period has expired. If the customer doesn't come in to pick up the check for four or five days after rescission has expired, can we charge interest during that time? Or may we only charge interest after the customer picks up the check and has the benefit of the funds?
Answer: You may charge interest. In fact, you may charge interest even during the rescission period unless state law requires otherwise. Truth in Lending does not restrict or regulate when you charge interest, it imposes requirements on when and how you disclose your fees and finance charges to the customer. Generally speaking though, it is a good idea to tell the customer when interest will begin so that they don't get a nasty surprise when they come in later.
Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 15, 12/97
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