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#2220867 - 09/03/19 09:09 PM Advertising Multiple Rates and APR
Annie Offline
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Joined: Sep 2018
Posts: 25
For closed end, non-dwelling secured loans, if a lender advertises multiple rates and APRs tied to term and amount of loan, must there be a repayment example for each APR or may the lender provide one illustrative example using one APR scenario. This assumes that the illustrative example is a typical scenario and not one achievable by a small portion of the population.

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#2220998 - 09/05/19 03:30 PM Re: Advertising Multiple Rates and APR Annie
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,422
Bloomington, IN
if a lender advertises multiple rates and APRs tied to term and amount of loan

Can you be more specific? If you are asking what I think you are then IMO you would need a representative example for each rate and term advertised.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2221058 - 09/05/19 09:35 PM Re: Advertising Multiple Rates and APR Annie
Annie Offline
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Joined: Sep 2018
Posts: 25
For example, the ad would show several loan terms, such as 5, 10, 15, 20 years and then loan amounts.

The APR for a 5 year loan at $100,000+ = x.xx%, for $75,000 to $100,000 APR = x.xx%.

This pattern would be repeated for each loan term.

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#2221206 - 09/09/19 06:40 PM Re: Advertising Multiple Rates and APR Annie
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,422
Bloomington, IN
IMO you would need a representative payment example for each term and rate advertised.

5. Use of examples. A creditor may use illustrative credit transactions to make the necessary disclosures under §1026.24(d)(2). That is, where a range of possible combinations of credit terms is offered, the advertisement may use examples of typical transactions, so long as each example contains all of the applicable terms required by §1026.24(d). The examples must be labeled as such and must reflect representative credit terms made available by the creditor to present and prospective customers.

(d) Advertisement of terms that require additional disclosures. (1) Triggering terms. If any of the following terms is set forth in an advertisement, the advertisement shall meet the requirements of paragraph (d)(2) of this section:

(i) The amount or percentage of any downpayment.

(ii) The number of payments or period of repayment.

(iii) The amount of any payment.

(iv) The amount of any finance charge.


(2) Additional terms. An advertisement stating any of the terms in paragraph (d)(1) of this section shall state the following terms, as applicable (an example of one or more typical extensions of credit with a statement of all the terms applicable to each may be used):

(i) The amount or percentage of the downpayment.

(ii) The terms of repayment, which reflect the repayment obligations over the full term of the loan, including any balloon payment.

(iii) The “annual percentage rate,” using that term, and, if the rate may be increased after consummation, that fact.



I would suggest utilizing this option:

i. A creditor may use a unit-cost approach in making the required disclosure, such as “48 monthly payments of $27.83 per $1,000 borrowed.”
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2221246 - 09/09/19 10:55 PM Re: Advertising Multiple Rates and APR Annie
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 9,999
Toano, VA
Originally Posted by KAJ8484
if a lender advertises multiple rates and APRs
If you advertise a simple interest rate, then you're obligated to disclose the APR that results from that IR and the other terms that are part of that deal. How are you calculating the necessary APR without also calculating the payment schedule? Getting the payment schedule information is much more difficult than plugging the payment numbers into a rate grid.
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