Reviewing small dollar consumer purpose loan ($500), with a finance charge of $7.15. APR on the note document says "N/A" which is something I have never seen before. I questioned loan staff about this, and they indicated that according to our loan documentation software provider, when the finance charge is minimal, the system will generate an "N/A" for the disclosed APR on the note document. Is this permissible? And if so, where in the regulation does it state this is allowed? Thanks!

"And if so, where in the regulation does it state this is allowed?"

That is the question I would ask the provider.

How many installments for repayment does your note call for?

9 monthly payments

12 CFR 1026.18(e). If the Finance Charge is less than $7.50 on an Amount Financed of more than $75, an APR need not be disclosed.

How about that.

1026.18(e) Annual percentage rate. The annual percentage rate, using that term, and a brief description such as “the cost of your credit as a yearly rate.” For any transaction involving a finance charge of $5 or less on an amount financed of $75 or less, or a finance charge of $7.50 or less on an amount financed of more than $75, the creditor need not disclose the annual percentage rate.

Now let's calculate your losses. From that $7.15 FC, you must deduct the cost of:
1. Interviewing and accepting an application
2. Making a credit decision (and possibly a second review)
3. Generating the loan document (s)
4. Booking a new loan
5. Processing 9 payments
6. Processing a payoff
7. Recordkeeping
8. (Possibly) auditing this account

9. Figuring out whether it's okay for the disclosure to say "n/a" for APR!