I have a question about how you would disclose a promotional rate on a closed-end auto loan. The terms are as follows: 5 year loan, regular rate is 4% fixed, but the first year would be discounted to 2.5% fixed. Does the fact that this rate is increasing after consummation make this make this a variable rate loan? Is this true even though the timing and amount of the increase are know prior to closing? Will the disclosed APR need to be a combined rate?

It is not a variable rate loan, it is a stepped rate loan and yes, the APR will be based on the payment stream that you establish for the loan amortization which will take into account the time period of both interest rates..

...and you must also reflect any buydown fees or other costs that are part of the legal obligation between the lender and borrower.