If a person is approved for a loan and the loan officer calls the customer to inform the customer of the approval and also discloses the loan rate to the customer, does the same Reg Z rule apply?.....The APR must also be disclosed during the phone conversation?

bumpus
bumparoo
bumpette

Anyone?

IMHO - No.

It is not an advertisement so no APR required & you evidently have had an application and already have, or will withni 3 Bus Days, provide the Early TIL with an APR (if type of loan requires early) - OR if early is not required; you will provide TIL prior to consumation.

OK....I buy that. But......if someone calls just inquiring about rates, quoting APR would be required and if there are prepaid FCs which would elevate the APR, the rep can't just say the loan rate and add "APR" to the end of it. The rep would have to give an example (say....$10,000 loan) and then state the APR as compared to the loan rate......right?

The oral disclosure of the APR is governed by 226.26, not 226.24.

If discussing the cost of the credit with the consumer then IMHO the APR must be disclosed.

Thank you, Dan. I'm having trouble lining up my example (first post) with 226.26 and maybe I'm trying to read it too literally. But for my example, the customer is not inquiring. The customer applied for a loan and based upon our internal evaluation criteria, was approved and granted a loan rate. When the loan officer calls the customer to announce the approval, the loan officer also announces the loan rate for which the customer was approved. If the loan is of the type to be assessed a PPFC, well, the loan officer has no idea of the APR...which as ktac stated, would typically be provided with an ETIL w/i 3 days or a final at closing. So, must the loan officer state the details of a sample transaction? Seems like it would be easier for the lender just to have the ETIL or TIL prepared in advance of calling the customer....though THAT might prove to be impractical too. I am at a loss.....and appreciate your response to this.

When a customer calls in to ask for loan rates:

1) We should be disclosing APR, right? Not just the rate?
2) Since APR changes based on loan amount, are there general guidelines for loan amount to talk about (i.e., $15,000 on a car loan but $115,000 on a home loan)?

Thanks!

It just has to be a representative example.

There's no limit to what you might define to be "representative," but you can easily set up a procedure that should withstand regulator scrutiny. For example, grab a new loan report or two and pull the most recent 24 loans of each type you would quote by phone. Put the loan amounts in a spreadsheet and sort them. Pull 6 off each end of the sorted list (in order to eliminate outliers.) Average what's left and maybe round to the nearest $5,000.

Thank you!

This is kind of a side note, but one of the most important points that I remember from banker training is to always quote rates as an "as low as" rate because the rates will vary based on terms and credit worthiness.

By stating that you offer a 30 year $100,000 purchase loan with an interest rate as low as 4.00% and an APR as low as 4.23% you cover yourself from having the consumer allege that you guaranteed them that rate should theirs differ. Just a thought.

That's a really good point! Thanks for the advice