We are considering using an internal index to determine rates for our variable rate consumer loans. I would appreciate some feedback on pros v. cons on doing this as well as any other considerations we need to consider. Thanks.

The rate for Home Equity lines must be external. The con to using an internal rate is that someone can claim you are manipulating it.

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Al Miller, CRCM
Fremont Bank (CA)
(510) 790-5825
(510) 505-5211 FAX

Opinions expressed are my own and not necessarily shared by my employer.

We do not do Home Equity Lines.
But other than the manipulation claim as long as we explain the formula used for our internal index as required in Reg Z, what other concerns would we have?

Thanks