When trigger terms are used in a credit offer, what must be disclosed to the borrower?

When trigger terms are used in a credit offer, what must be disclosed to the borrower?

• A. APR and other costs of loan
• B. Only APR
• C. Only payment amount
• D. Only interest rate

Answer: (A)

When trigger terms are used in a credit offer, the borrower must be shown the true cost of the loan. This means disclosing the annual percentage rate (APR) along with the other costs of the loan. The APR reflects the overall cost of borrowing, including interest and fees, and the “other costs” cover points, fees, and any additional charges that affect how much the loan will actually cost over its term. This requirement exists to prevent ads from looking attractive with a low payment or rate while hiding substantial fees or total costs. So, the best choice is that APR and other costs of the loan must be disclosed. The other options fall short because they omit either the APR, the costs, or both, which would hide the true cost of borrowing.

When trigger terms are used in a credit offer, the borrower must be shown the true cost of the loan. This means disclosing the annual percentage rate (APR) along with the other costs of the loan. The APR reflects the overall cost of borrowing, including interest and fees, and the “other costs” cover points, fees, and any additional charges that affect how much the loan will actually cost over its term. This requirement exists to prevent ads from looking attractive with a low payment or rate while hiding substantial fees or total costs.

So, the best choice is that APR and other costs of the loan must be disclosed. The other options fall short because they omit either the APR, the costs, or both, which would hide the true cost of borrowing.