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#127098 - 10/30/03 09:41 PM Need quick answer on car ad
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
Here is our ad:

Used Car Rate Special
6.29% APR* through November 30th, 2003
48 to 54 months financing

*Example assumes Annual Percentage Rate (APR) for a used model. APR is based on a loan amount of $25000 for 54 months with monthly payments of $xxx.xx. All applications subject to credit approval.

Question: Our president somehow wants to put the 6.25% interest rate in the body of the ad because it sounds better. How can I modify this to please him and ensure compliance? Thanks!

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Marketing
#127099 - 10/30/03 09:46 PM Re: Need quick answer on car ad
Anonymous
Unregistered

Since you have a difference between rate and APR, I assume you have fees, which makes me wonder how you can be competitive, but that is another question (maybe you are charging them for titling)

I think (and please read the tag under my name), that you can list the 6.25% rate in the body of the text and put the asterisk nect to that, and include the 6.29 APR in the disclosures.

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#127100 - 10/30/03 09:49 PM Re: Need quick answer on car ad
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
Yeah, we have a $25.00 doc fee. So in your expert marketing opinion I could change this to read:

Used Car Rate Special
6.25%* through November 30th, 2003
48 to 54 months financing

*6.29% APR. Example assumes Annual Percentage Rate (APR) for a used model. APR is based on a loan amount of $25000 for 54 months with monthly payments of $xxx.xx. All applications subject to credit approval.

Thanks for your help!



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#127101 - 10/30/03 09:52 PM Re: Need quick answer on car ad
Bartman Offline
Diamond Poster
Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
Here's the pertinent section of Reg. Z:

(b) Advertisement of rate of finance charge. If an advertisement states a rate of finance charge, it shall state the rate as an ``annual percentage rate,'' using that term. If the annual percentage rate may be increased after consummation, the advertisement shall state that fact. The advertisement shall not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.

I've had examiners (FRB) really push the "not more conspicuously than" interpretation, and in their eyes Dave's suggestion wouldn't fly.

You might consider bouncing your draft copy past your examiner.
_________________________
Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#127102 - 10/30/03 10:01 PM Re: Need quick answer on car ad
Anonymous
Unregistered

I would think that you would want to include the $25 doc fee in the disclosures, and read Bartman's reply. I could be on the edge orr worng or I may be right. My answer is just my gut feeling, but when I plan on an ad like that,and we don't charge fees, so I never come across that, I always run it by Kirchamn compliance first.

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#127103 - 10/30/03 10:09 PM Re: Need quick answer on car ad
MackenzieS Offline
Diamond Poster
MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
Okay guys, I am really reaching here to come to a compromise.

Although I personally believe this is confusing to the consumer, would this work?

Used Car Rate Special
6.25% (6.29 APR)* through November 30th, 2003
48 to 54 months financing

*Example assumes Annual Percentage Rate (APR) for a used model. APR is based on a loan amount of $25000 for 54 months with monthly payments of $xxx.xx. All applications subject to credit approval.

Has anyone ever put both right next to each other?



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#127104 - 10/30/03 10:13 PM Re: Need quick answer on car ad
Bartman Offline
Diamond Poster
Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
Yeah, this all comes down to compromise, doesn't it?

I've done ads with the rate and the APR next to each other; and ads with the APR in the body and the simple interest rate in mice type at the bottom.

I've also gotten away with the simple interest rate in the headline or body of the ad, and the APR in a different location but in the same type size.

In reviewing your original post, I assumed you were footnoting the APR (meaning smaller type than the simple interest rate). I'd steer away from that approach, unless you get an examiner-type to sign off. If my assumption about footnoting is not correct, just ignore me.
_________________________
Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#127105 - 10/30/03 10:15 PM Re: Need quick answer on car ad
Anonymous
Unregistered

And of course my reply would be this:

If 6.25% is a great rate in your marketplace, and I assume you are advertising to get many many loans, why don't you eat the dinky $25 fee, not have to disclose a difference, and plaster the 6.25% as big as possible????

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#127106 - 10/30/03 10:17 PM Re: Need quick answer on car ad
Bartman Offline
Diamond Poster
Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
Right! Make it up in volume!
_________________________
Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#127107 - 10/31/03 12:27 AM Re: Need quick answer on car ad
Anonymous
Unregistered

This is from Mackenzie, but I am at home...

I suggested that they eat it, but NOOOOOOOOOO..that would be too easy. Don't even get me started on the rate issue. I just wanted to drop in and say thanks for the help. I had one hour to figure that puppy out before leaving work for 10 days.

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