closed end credit trigger terms

Triggering terms are defined by the Truth in Lending Act TILA and are designed to protect consumers from predatory lending practices. Specifically credit unions may want to review pages 61 64 76 97 and 99 of the Guide as these.

Federal Register Truth In Lending Regulation Z

Sometimes mortgage advertisers are not fully aware of the Regulation Z Triggering Terms rules that require additional disclosures to be made in your mortgage ad.

. For instance a few terms for closed end credit that trigger the need for additional disclosure are. And 3The amount of. Occasionally you might have closed-end credit with a variable interest rate.

Subpart C - Closed-End Credit 102617 102624 Show Hide 102617 General disclosure requirements. 102661 Hybrid prepaid-credit cards. Closed End Credit is defined 2262 as credit other than open-end credit.

Triggering terms for closed-end loans. If any triggering term is used in a closed-end credit advertisement then the following three disclosures must also be included in that advertisement. 102659 Reevaluation of rate increases.

The amount or percentage of the down payment. If the institution used triggering terms on any open-end plan advertisement 10266b opens new window did the advertisement also clearly and conspicuously include. Subpart C - Closed-End Credit 102617 102624 Show Hide 102617 General disclosure requirements.

Once the closed end credit is paid off. For instance a few terms for closed end credit that trigger the need for additional disclosure are. For closed-end credit section 102624d requires additional disclosures if an advertisement mentions.

A triggering term is a word or phrase that legally requires one or more disclosures when used in advertising. The number of payments or period of repayment such as 48-month payment term or 30-year mortgage this is often the most overlooked triggering term The amount of any payment 550 per month The amount of any finance charge 500 origination fee 2 points. The fee or premium may be disclosed on a unit-cost basis only in open-end credit transactions closed-end credit transactions by mail or telephone under 102617g and certain closed-end credit transactions involving a debt cancellation agreement that limits the total amount of indebtedness subject to coverage.

Youll have a payment due every month until the balance is. With closed end credit when you originally apply for a loan with the lender the terms never change. D Advertisement of terms that require additional disclosures 1 Triggering terms.

Or 4 The amount of any finance charge. Closed-end credits include all. 1The creditor reasonably contemplates repeated transactions.

Under 102624d1 whenever certain triggering terms appear in credit advertisements the additional credit terms enumerated in 102624d2 must also appear. 102616a opens new window 12. 102660 Credit and charge card applications and solicitations.

If credit terms are specific are terms stated that the credit union actually offers or will arrange or offer. Closed end credit is different because it doesnt allow you to continue using the same credit over and over. Different sets of triggering terms apply to closed-end credit products such as mortgages and open.

2The creditor may impose a finance charge from time to time on an outstanding unpaid balance. For further information regarding trigger terms and advertisements member credit unions may want to review NAFCUs Advertising Guide. If the annual percentage rate may be increased after consummation of.

Closed-end credit usually has a lower interest rate than open-end credit which makes it better for longer-term borrowing. The use of positive numbers also triggers further disclosure. It sets forth definitions 10262 and stipulates which transactions are covered and which are exempt from the regulation 10263.

Ii The number of payments or period of repayment. 22624 - Closed end credit. I The amount or percentage of any downpayment.

A trigger term is used when advertising what type of credit plan. Ing on whether the credit is open-end credit cards and home equity lines for example or closed-end such as car loans and mortgages. Click card to see definition.

The repayment includes all the interests and financial charges agreed at the signing of the credit agreement. However the APR is a triggering term for open-end credit. Every day except Sundays and Federal holidays.

Up to 48 months to pay 90 percent financing As low as 50 a month 36 equal payments 500 total cost of credit Of course there are triggering terms that do not trigger additional disclosure. Tap card to see definition. The correct answer is.

Closed-end credit is a type of credit that should be repaid in full amount by the end of the term by a specified date. Subpart AProvides general information that applies to both open-end and closed-end credit transactions including definitions explanations. 102657 Reporting and marketing rules for college student open-end credit.

The loan amount interest rate and loan term are agreed upon and both you and the lender must adhere to these terms. Open-end credit is defined as credit extended under a plan in which. An advertisement including any of the previous triggering terms must also include each of the following disclosures as applicable.

Heres a quick review of the Triggering Terms that come straight from Reg Z 102624. The annual percentage rateusing that term spelled out in full. These provisions apply even if the triggering term is not stated.

Youll pay less interest overall by taking advantage of a lower interest rate. Regulation Z is structured accordingly. 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.

The terms of repayment. Applies to open-end and closed-end credit transactions. 102658 Internet posting of credit card agreements.

Subpart B sections 10265 through 102616 relates to open-end credit. 12 percent Annual Percentage Rate or a 15 annual membership fee buys you 2000 in credit. It also contains the rules for determining which fees are finance charges 10264.

Understanding Finance Charges For Closed End Credit