We are wanting to send our customers a promotional coupon that says if they bring in the coupon they will receive a 1/4% off their interest rate on their next auto loan. I have read Reg Z on closed end credit for triggering terms but I'm not yet comfortable.

If we use the term "interest rate" on the coupon by itself without using any numerical values can we stay away from APY language? We would simply state: "Bring this coupon in and receive 1/4% off your interest rate for your next auto loan...". Well, something to that degree. Also, should we state something to the fact of "with approved credit"?

Thanks for your input.

I would think it is permissible since rates may change until the customer gets to you. Will you have a cut-off date? And yes, I would think you would want to state with approved credit.

I think they are going to use this in both a coupon mailing and add it to a package sold by the New Accounts representatives as well. So it will be in an advertisement first and then it will actually go in a brochure. We have a little package where customers can pay $7 a month and get ID Theft protection, travel savings, insurance, etc... to beef up the package we want to say "okay you can also have either a free safe deposit box for 1 year OR $50 off closing costs for the purchase of a home OR 1/4% off your interest rate for an auto loan.

I agree, the phrase "1/4% loan rate discount" does not trigger anything. Are you saying they can choose one of those specials for the life of the account or per year? I don't know how you would track that.

We offer all 3 of those last items as a part of our club account except we do $100 off mortgage closing. We also offer a 1/4% CD rate bonus. These items are available as long as the customer has the account. They can have all of them any time they want. I would think any time a customer gets a mortgage loan you would want to give them $50 off, not just once. Just a thought.

It helps cross-sell checking accounts because when someone is taking out an auto loan, home loan, or CD, the bank employee can say "I can give you a rate discount if you'll move your checking account to our bank."

FWIW, I have done 1/4% loan discount coupons and my experience has been that no one gets very excited about them. It just doens't compete with what the car dealers are doing and it is hard for people to mentally quantify.

I always put "subject to standard credit approval" and "automatic debit from your checking required" on the coupon.