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

2.  Truth-in-Lending Act  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.

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 theseTriggers disclosure Triggering Items and Disclosures

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.

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