Question: We want as many customers as possible to allow auto-payments for their loans. We'll offer a discounted loan rate if they accept this. If they close that account, or don't have sufficient funds, we want to bump the rate and payment back up. Is this allowed?
Answer: It would be allowed, but you have to ensure that you make variable-rate loan disclosures. You may also have a hard time bumping the rate up and down as customers will contend that there was enough for the payment two months ago, but not last month, and this month there is. That maintenance could be burdensome and more costly than the savings with auto-payments.
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