1. The Loan and the Consumer Chapter 12 ________________ The Loan and the Consumer © 2010 by Cengage Learning

2.  Federal Reserve Board “Regulation Z”  Requires lender to show the borrower the cost of the credit.  Requirements include: ◦ Amount financed ◦ Finance charge ◦ Annual percentage rate ◦ Total payments

3. © 2010 by Cengage Learning  Annual percentage rate combines the interest rate with the other costs of the loan into a single figure that shows the true annual cost of the loan.  If you have the same payment on two loans but one has higher up front fees, that one has a higher APR.  $100,000 borrowed and payments of $1000 Versus $97,000 (net after $3000 fees)

4. © 2010 by Cengage Learning  Borrower’s right to cancel a credit transaction.  Three business days after signing to back out.  Includes Saturdays.  Does not apply to credit used for the acquisition or initial construction of your principal dwelling.

5. © 2010 by Cengage Learning Down payment Any payment Number of payments Period of payments Amount of any finance charge, or statemen t: no charge for credit Cash price or the amount of the loan Down payment (or none) Number, amount, frequency of payments Annual percentage rate (APR) Deferred payment price or total payments Mention these triggers disclosure

6. © 2010 by Cengage Learning Borrower Property Title Lenders Qualify: Loan Process

7. © 2010 by Cengage Learning  Refusing to make loans in certain areas. No Loans! $ $ $

8. © 2010 by Cengage Learning  Provides lender with independent means of checking borrower’s credit history.  Fair Credit Reporting Act – consumer right to their file at credit bureau.  Credit Scoring – method used today to evaluate credit risk.  Online: Visit AnnualCreditReport.com (This is the ONLY site that's truly free! Don't be fooled by ads saying otherwise. Clark Howard )AnnualCreditReport.com

9. © 2010 by Cengage Learning  APR  Credit report  Fair credit reporting act  Finance charge  Liquid asset  Redlining  Regulation Z  Truth-in-Lending act