True or False: When calculating a "regular" loan, Reg Z requires that the disclosed APR be within 1/2% of the actual APR.

True or False: When calculating a "regular" loan, Reg Z requires that the disclosed APR be within 1/2% of the actual APR.

• A. True
• B. False
• C. Only for short-term loans
• D. Depends on the lender

Answer: (B)

The statement is false because Regulation Z, under the Truth in Lending Act, does not impose a specific requirement that the disclosed Annual Percentage Rate (APR) be within 1/2% of the actual APR for "regular" loans. Instead, the regulation mandates that the APR must be a reasonably accurate representation of the loan's cost and reflect the total finance charges in relation to the amount financed. It's important to note that while there are tolerance levels for certain disclosures, the general expectation in Regulation Z is for lenders to provide accurate APR calculations that inform borrowers adequately. Discrepancies beyond the acceptable tolerance levels, which could lead to potential penalties, are not strictly defined by a 0.5% margin for all types of loans, including "regular" loans. Thus, the correct understanding here is that the assertion regarding the specific 1/2% requirement is not an accurate reflection of the regulations set forth in Regulation Z.

The statement is false because Regulation Z, under the Truth in Lending Act, does not impose a specific requirement that the disclosed Annual Percentage Rate (APR) be within 1/2% of the actual APR for "regular" loans. Instead, the regulation mandates that the APR must be a reasonably accurate representation of the loan's cost and reflect the total finance charges in relation to the amount financed.

It's important to note that while there are tolerance levels for certain disclosures, the general expectation in Regulation Z is for lenders to provide accurate APR calculations that inform borrowers adequately. Discrepancies beyond the acceptable tolerance levels, which could lead to potential penalties, are not strictly defined by a 0.5% margin for all types of loans, including "regular" loans. Thus, the correct understanding here is that the assertion regarding the specific 1/2% requirement is not an accurate reflection of the regulations set forth in Regulation Z.