Date Finance Charge Begins

Answered by:

Question:

We're having a difference of opinion at the office! When a loan has Right of Rescission, is the Date Finance Charge Begins the funding date (after Rescission) or the note date? In other words, if the customer does not rescind, can you charge interest from the date of the note or the date you disburse?

Answer:

Truth in Lending permits you to charge interest in any way that you choose. You simply have to take the full amount of interest into account in your TIL calculations. Some states prohibit charging interest when the consumer doesn't have the use of the money such as during the rescission period but TIL allows you to charge interest during that period. Check your state law to be sure.

First published on BankersOnline.com 1/7/02