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F ederal r eser ve Bank o f Dallas

DALLAS, TEXAS

75222

,

Circular No. 69-6l
March 17 19^9

REGULATION Z
TRUTH IN LENDING

To All State Member Banks
in the Eleventh Federal Reserve District:
There is attached a copy of Regulation Z, Truth in
Lending, issued by the Board of Governors of the Federal Reserve
System, effective July 1, 1969, together with a pamphlet con­
taining questions and answers, and other information relating
to the Regulation.
Any inquiry relating to this Regulation should he
addressed to this Bank, Station K, Dallas, Texas 75222.

Yours very truly,
P. E. Coldwell
President
Enclosure (l)

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

What you
ought to know about
FEDERAL RESERVE
REGULATION

fz
Truth In Lending
Consumer Credit
Cost Disclosure

THIS NEW FEDERAL LEGISLATION GOES INTO EFFECT JULY 1, 1969

Enforcement
Specific responsibilities for enforcement of Regulation Z are divided among nine
Federal agencies. A complete list of these agencies and the types of businesses they
cover follows this section.

Penalties Under TheTruth in Lending Act
Tf you fail to make disclosures as required under this legislation, your customer may
sue you for twice the amount of the finance charge—for a minimum of $100, up to a
maximum of $1000—plus court costs and attorney’s fees. And if you willfully or
knowingly disobey the law or Regulation Z and are convicted you could be fined
up to $5000, or be imprisoned for one year, or both.

New Credit Forms and The Ones You Use Now
If you have taken the proper steps to get any needed new credit forms before
July 1, 1969, and find they cannot be delivered to you by that date, then you may
be able to use your existing forms. But they must show clearly the information a
customer must be given under Regulation Z. You may do this by adding to pr
altering your forms. However, after December 31,1969, you may no longer do this.

Annual Percentage Rate-Tables
Figuring out the annual percentage rate of the cost of credit on individual
transactions can be very complex in some instances. Chart makers can furnish you
with specialized tables to meet your business needs. If you do not have special tables,
and wish to obtain a set of tables that apply to all creditors you may write to your
nearest Federal Reserve Bank or to the Board of Governors of the Federal Reserve
System, Washington, D.C. 20551.
From these sets of tables you can determine annual percentage rates or the amount
of the finance charge for a given rate. Volume I, which costs $1, provides four tables:
FRB100— Covering up to 60 monthly payments with rates from
M
2% to 61.75%
FRB200— Covering 61 to 120 monthly payments with rates from
M
2% to 41.75%
FRB300— Covering 121 to 480 monthly payments with rates from
M
2% to 21.75%
FRB 100— Covering up to 104 weekly payments with rates from
'W
2% to 61.75%
Volume II, also available at the cost of $1, gives another set of tables with
instructions, for use with Volume I above. It will help you work out annual percentage
rates on irregular payment or multiple advance transactions.

Further Information
If you want more information or have any questions after studying this pamphlet,
including Regulation Z, you can get help from the Federal agencies listed on the
next page. You’ll find trade associations and Chambers of Commerce helpful, too.

4

Federal Agencies
From the list that follows, you will be able to tell which Federal Agency covers your particu­
lar business. Any questions you have should be directed to that agency. These agencies are
also responsible for enforcing Regulation Z.
N a tio n a l B a n k s

Comptroller of the Currency
United States Treasury Department
Washington, D .C . 20220
Sta te M e m b e r B a n k s

Federal Reserve Bank serving the area in which the State member bank is located.

Nonincmber Insured Banks
Federal Deposit Insurance Corporation Supervising Examiner for the District in which the non­
member insured bank is located.
Savings Institutions Insured by the FSLIC and Members o f the FHLB System
(except for Savings Banks insured by FDIC)
The FH LB ’s Supervising Agent in the Federal Home Loan Bank District in which the institution
is located.
F e d e r a l C red it U n io n s

Regional Office of the Bureau of Federal Credit Unions, serving the area in which the Federal
Credit Union is located.
Creditors Subject to Civil Aeronautics Board
Director, Bureau of Enforcement
Civil Aeronautics Board
1825 Connecticut Avenue, N.W .
Washington, D .C . 20428
Creditors Subject to Interstate Commerce Commission
Office of Proceedings
Interstate Commerce Commission
Washington, D .C . 20523
Creditors Subject to Packers and Stockyards A ct
Nearest Packers and Stockyards Administration area supervisor.
Retail, Department Stores, Consumer Finance Companies, and A ll Other Creditors
Truth in Lending
Federal Trade Commission
Washington, D .C . 20580

5

REGULATION

Z
Some general questions
and answers
Q: What types of credit are covered under Regulation Z?
A: Generally, credit you extend to people for personal, family, household or
agricultural uses, not exceeding $25,000.
(Reg. Z/226.2 ( k ) )
But A L L real estate credit transactions for these purposes are covered
regardless of the amount.
(Reg. Z/226.3 (c ))
Q: What types of credit are not covered?
A: The following are not affected by Regulation Z: (Reg. Z/226.3)
1. Business and commercial credit—
except agricultural credit.
2. Credit to Federal, State and local governments. (However,
governmental units extending credit to individuals are affected
by this law.)
3. Transactions in securities and commodities accounts with a broker
dealer registered with the Securities &Exchange Commission.
4. Transactions under certain public utility tariffs.
5. Credit over $25,000—
except real estate transactions.
Q: Can a State law be substituted for Regulation Z?
A: Yes it can, provided The Federal Reserve Board makes that determination
as provided by law. Any determination made will be published
(Reg. Z /226.12). Creditors should be guided by Reg. Z/226.6 (b)
and (c) in the meantime.

6

Q: What happens if I not only follow Regulation Z but also elect to follow
inconsistent State law?

A: In these cases the State disclosure may be shown on a separate sheet.
They may also be shown on the same statement as the Federal disclosures.
But in this event they must appear separately and below the Federal
disclosure, clearly marked that they are inconsistent with the Federal
disclosures, and separated by a dividing line.
Regulation Z is very specific on these points. (Reg. Z/226.6 ( c ) )
Q: Is any special terminology prescribed?
A: Yes, certain terminology is specified that must be used in making
disclosures required by the Regulation.
(Reg. Z/226.6 (a); Reg. Z/226.7 (b) (c);
Reg. Z/226.8 (b) (c) (d);Reg. Z/226.9 (b);Reg. Z/226.11 (c))
Q: Do disclosures have to be made in the order they appear in the Regulation?
A: No, but they must be listed in an order which will be meaningful to your
customer. The examples of forms illustrate ways in which this may be
done. (See pages 18 to 29 of this pamphlet.) (Reg. Z/226.6 (a))
Q: What terms are used to describe credit transactions in the Regulation?
A: The Regulation divides all consumer credit transactions into two broad
categories; open-end credit, and credit other than open-end. These are
discussed in subsequent sections of these Questions and Answers.
Q: How long do I have to keep records?
A: You should keep evidence of compliance for two years. (Reg. Z/226.6 (i))
Q: Will anyone inspect my records?
A: If asked by the proper agency you must show your records relating to
disclosure and evidence of compliance. (Reg. Z/226.6 (i))

REGULATION

z
Some questions and answers
on the finance charge and
annual percentage rate
Q: What Is the finance charge?
A: It is the total of all costs which your customer must pay, directly or
indirectly for obtaining credit. (Reg. Z/226.4)
Q: What costs arc included In the finance charge?
A: Here are some of the more common items that you must include in your
finance charge. See Reg. Z/226.4 for others and for qualifications
which apply.
1. Interest.
2. Loan fee.
3. Finders fee or similar charge.
4. Time price differential.
5. Amount paid as a discount.
6. Service, transaction or carrying charge.
7. Points.
8. Appraisal fee (except in real estate transactions).
9. Premium for credit life or other insurance, should you make this
a condition for giving credit.
10.
Investigation or credit report fee (except in real estate transactions).
Q: Are all costs part of the finance charge?
A: No, some costs which would be paid if credit were not employed may be
excluded. However, you must itemize and show them to your customer.
(Reg. Z/226.4 gives a complete list.) Here are a few examples:

8

1. Taxes.
2. License fees.
3. Registration fees.
4. Certain title fees and other legal fees.
5. Some real estate closing fees.
Q: In what form Is the finance charge to be shown to the customer?
A : It must be clearly typed or written, stating the dollars and cents total and
the annual percentage rate. The words “finance charge” and “annual
percentage rate” must stand out especially clear. (Reg. Z/226.6 ( a ) )
In the sale of dwellings, the total dollar finance charge need not be stated,
although the annual percentage rate must be included.
Q: What is the annual percentage rate?
A: Simply put, it is the relative cost of credit in percentage terms.
(Reg. Z/226.5 (e»
Q: Are maximum or minimum rates specified in Regulation Z?
A: No. Regulation Z does not fix maximum, minimum, or any charges for
credit. But it requires that you show whatever rate you do charge.
Q: Do you ever have a choice about how you state the annual percentage rate?
A : Before Jan. 1, 1971 you have the option to disclose the annual percentage
rate in dollar terms. For example— 11 finance charge per year per $ 100
“$
of unpaid balance.” However, beginning Jan. 1, 1971, the rate
must be stated as a percentage. (Reg. Z/226.6 (j) )
Q: How accurate must the annual percentage rate be?
A: Accurate to the nearest one quarter of one percent. (Reg. Z/226.5)
Q: How is the annual percentage rate computed?
A: It depends on whether the credit is open end (Reg. Z/226.5 ( a ) )
or other than open end credit. (Reg. Z/226.5 (b ))

9

REGULATION

z
Some questions and answers
about open end credit
Q: What is open end credit?
A: Typically it covers most credit cards and revolving charge accounts in
retail stores, where finance charges are usually made on unpaid amounts
each month. (Reg. Z/226.2 (r); Reg. Z/226.7)
Q: What must an open end credit customer be told under this law?
A: If it is a new account, then your customer must receive these specific items
in writing to the extent applicable: (Reg. Z/226.7 (a) )
1. The conditions under which the finance charge may be imposed and
the period in which payment can be made without incurring a
finance charge.
2. The method used in determining the balance on which the
finance charge is to be made.
3. How the actual finance charge is calculated.
4. The periodic rates used and the range of balances to which
each applies.
5. The conditions under which additional charges maybe made along
with details of how they are calculated.
6. Descriptions of any lien which you may acquire on a
customer’s property.
7. The minimum payment that must be made on each billing.
Q: What about customers who already have open end accounts on
July 1,1969?
A: The same information must be sent to them by July 31 if the account has
an unpaid balance on July 1. Where no balance is owed on that date,
the same information must be supplied on or before the first billing that

10

follows use of the account. (Reg. Z/226.7 (f) )
Q: Are periodic statements necessary on open end accounts?
A: Yes, but only where there is an unpaid balance over $1 or where a
finance charge is made. (Reg. Z/226.7 (b ))
Q: What sort of information must accompany a monthly statement?
A: Where applicable, you must give customers this information:
(Reg. Z/226.7 (b ))
1. The unpaid balance at the start of the billing period.
2. The amount and date of each extension of credit and identification of
each item bought.
3. Payments made by a customer and other credits: this includes
returns, rebates and adjustments.
4. The finance charge shown in dollars and cents.
5. The rates used in calculating the finance charge plus the range of
balances to which they apply.
6. The annual percentage rate.
7. The unpaid balance on which the finance charge was calculated.
8. The closing date of the billing cycle and the unpaid balance
at that time.
Q: Where must this information appear?
A: Some items must appear on the actual face of the statement. Others may
be shown on the reverse side; or, on a separate form enclosed in the
same envelope. (Reg. Z/226.7 ( c ) )
Q: How is the annual percentage rate determined on open end credit?
A: The finance charge is divided by the unpaid balance to which it applies.
This gives the rate per month or whatever time period is used.
The result is multiplied by 12 or the other number of time periods used by
you during the year. (Reg. Z/226.5 ( a ) )

Here's an example:
A typical charge of lV z % is made on an unpaid balance where bills-are sent
out monthly. The annual percentage rate would be twelve times
W 2 % or 18%.
Other methods for calculating the annual percentage rate on open end credit
are detailed in Reg. Z/226.5 (a) and Reg. Z/226.7 (b) (6).

11

REGULATION

z
Some questions and answers
about credit other
than open end
Q: What types of credit are included?
A: Both loans and sales credit— every case for a specified period of time
in
where the total amount, number of payments, and due dates are agreed
upon by you and your customer. Typically, it is used in buying or financing
the purchase of “big ticket” items. A good example is a loan from a finance
company to buy an automobile. Another example is credit extended by a
store to buy a washing machine, a television set, or other major appliance.
It also includes a single payment loan. (Reg. Z/226.8)
Q: What must the credit customer be told in these types of transactions?
A: You must present to your customer in writing the following information
as applicable, plus additional information relating to the type of credit
extended. (Reg. Z/226.8 (b))
1. The total dollar amount of the finance charge; except in the case of
a credit transaction to finance purchase of a dwelling.
2. The date on which the finance charge begins to apply, if this is
different from the date of the transaction.
3. The annual percentage rate. (For exception see
Reg. Z/226.8 (b) (2) (i) (ii))
4. The number, amounts and due dates of payments.
5. The total payments—except in the case of first mortgages on
dwelling purchases.
6. The amount you charge for any default, delinquency, etc. or method
you use for calculating that amount.

12

7. Description of any security you will hold.
8. Description of any penalty charge for prepayment of principal.
9. How the unearned part of the finance charge is calculated in the case
of prepayment. Charges deducted from any rebate or refund must
be stated.
Q: Are there any other things customers must be told?
A: That depends on the transaction—whether it is a loan or a credit sale:
Q: In the case of a loan, what do I have to tell my customers?
A : In addition to the information given your customer, as previously
indicated, you must also provide this information: (Reg. Z/226.8 (d ))
1. The amount of credit to be given to your customer. This includes
all charges which are part of the amount of credit extended but are
not a part of the finance charge. This information must be itemized.
2. Amounts that are deducted as prepaid finance charges and required
deposit balances.
Q: Regarding credit sales, what additional information do I give these
customers?
A: Again, you must give your customers all the information in the answer to
the second question in this section, and the following additional
information as applicable: (Reg. Z/226.8 (c))
1. The cash price
2. The down payment, including trade-in
3. The difference between the two
4. All other charges, itemized, that are included in the amount financed
but not part of the finance charge
5. The unpaid balance
6. Amounts deducted as prepaid finance charges or required deposit
balances
7. The amount financed
8. The total cash price, finance and all other charges. (This does not
apply to the sale of a dwelling.)
Q: When must customers receive all this information on loan or credit sales?
A: Before the credit is extended. (Reg. Z/226.8 (a ))
Q: Must this information be given to customers in writing?
A: Yes. You must include the information on the face of the note or other
instrument evidencing the obligation, or on a separate sheet that identifies
the transaction. (Reg. Z/226.8 (a))
Q: Are monthly statements required?
A. No. But if you do send out monthly statements, you must show clearly

the annual percentage rate, and the period in which a payment must be
made to avoid late charges. (Reg. Z/226.8 ( n ) )
Q: How is the annual percentage rate calculated on loans or credit other
than open end?
A: By the actuarial method—payments are applied first to interest due and
any remainder is then applied to reduce principal. (Reg. Z/226,5 (b ))
Q. What are examples of the actuarial method?
A: Here are two simple examples:
1. A bank loan of $100 repayable in equal monthly installments over
one year is made, at a 6% add-on finance charge. The annual
percentage rate would be 11%. The borrower would repay $ 106
over one year. He would only have use of the full $100 until he
made his first payment, and less and less each month as payments
are made. The effect is that the actual annual percentage rate is
almost twice the add-on percentage rate.
2. Using the same example as above with the 6% finance charge
discounted in advance. The annual percentage rate would be 11 Vi %
because the customer would only receive $94 and have to repay $ 100.
He would have full use of only $94 of the loan up to the time
he makes his first payment.
Q: But isn’t the actuarial method very complicated?
A : Yes, it is. Recognizing this, the Federal Reserve Board has prepared tables
showing the annual percentage rate based on the finance charge and the
number of weekly or monthly payments to be made. These tables are
available from the Federal Reserve Board and Federal Reserve Banks
at a nominal cost. (Reg. Z/226.5 (c))
Q: Must I use the Board’s Annual Percentage Rate tables?
A: No. You may wish to purchase specially prepared tables for your type of
business from one of several table or chart publishers. Trade associations
and financial institutions can be helpful also. (Reg. Z/226.5 (c) (2 ))
Q: Must the creditor always show the annual percentage rate?
A: Generally yes, except that on credit other than open end credit, if the
finance charge is $5 or less, and applies to credit of $75 or less, it need
not be shown. The same exception applies to a finance charge of $7.50 or
less on credit of more than $75. (Reg. Z/226.8 (b) (2) (i) & (ii))

14

REGULATION

z
Some questions and answers
about real estate
Q: Is real estate credit covered under Regulation Z?
A: Yes. All real estate credit in any am ount is covered under this Regulation
when it is to an individual and not for business purposes, unless the business
purpose is agriculture.
Q: Does real estate credit cover more than mortgages?
A: Yes, very definitely. Any credit transaction that involves any type of
security interest in real estate of a consumer is covered.
(Reg. Z/226.2 (w), (x) (y) & (z ))
Q: Are there any special provisions that apply to real estate credit?
A: Two basic points:
1. You do not have to show the total dollar amount of the finance
charge on a credit sale or first mortgage loan to finance the purchase
of the customer’s dwelling. (Reg. Z/226.8 (c) (8) and (d) (3))
2. In many instances, your customer has the right to cancel a credit
arrangement within three business days if his residence is used
as collateral for credit. (Reg. Z/226.9)
Q: Must a creditor inform his customer of the right to cancel?
A: Yes. He must furnish the Notice prescribed by the Regulation.
(Reg. Z/226.9 (b ))
Q: What must the customer do to cancel a transaction under the Regulation?
A: A customer may cancel a transaction
1. By signing and dating the Notice to customer required by
Federal law, which he receives from the creditor, and either
(a) mailing the Notice to the creditor at the address shown
on the Notice,

15

(b) delivering the Notice to the creditor at the address shown on the
Notice either personally or by messenger (or by other agents),
or
2. by sending a telegram to the creditor at the address shown on the
Notice. A brief description of the transaction which the customer
wishes to cancel should be included in the telegram.
or
3. by preparing a letter (or other writing) which includes a brief
description of the transaction which he wishes to cancel, and either
(a)
mailing the letter (or other writing) to the creditor at the address
shown on the Notice.
or
(b) delivering the letter (or other writing) to the creditor at the
address shown on the Notice either personally or by
messenger (or by other agents).
Q: What if the customer telephones that he is going to cancel?
A: A telephone call to the creditor may not be used to cancel a transaction;
W R I T T E N notice o f cancellation is required. If the customer takes one •
of the above steps to cancel within the three day period, he has effectively
cancelled the transaction.
Q: What if I haven’t received the notice of cancellation in three days?
A: You should allow time for a mailed letter or telegram sent within the
three day period to be delivered, and determine that your customer has not
cancelled the transaction.
Q: Does this right of cancellation apply to a first mortgage on a residence?
A: A first mortgage to finance the purchase of your customer’s residence
carries no right to cancel. However, a first mortgage for any other purpose
and a second mortgage on the same residence may be cancelled.
(Reg. Z/226.9 (g ))
Q: What happens regarding cancellation in the case of a mechanic’s lien
or similar security interest acquired by a craftsman who works on credit?
A: Take a craftsman, for example, who charges his customers a finance charge
or allows payment in more than four installments. His customer does have
a right to cancel, but only within three business days. Unless there is an
emergency the craftsman should wait three days before starting work.
(Reg. Z/226.9 (c ))
Q: Suppose a customer needs emergency repairs and cannot wait for
three days?
A: A customer may waive his right to cancel a credit agreement if credit is
needed to meet a bonafide personal financial emergency and if failure
to start repairs would endanger him, his family, or his property.
(Reg. Z/226.9 (e))
or

C ontinued on page 17 o f this section, follow in g the printed R egulation (white pages).

16

BOARD OF GOVERNORS
of the

FEDERAL RESERVE SYSTEM

TRUTH IN LENDING

REGULATION

z
(1 2 C F R 226)
Effective July 1 ,1 9 6 9

CO N TEN TS

P e
ag

Page
S e c . 2 2 6 .1 — A u t h o r i t y , S c o p e , P u r p o s e , e t c . . . .
( a ) A u t h o r i t y , s c o p e , a n d p u r p o s e ......................
( b ) A d m i n i s t r a t i v e e n f o r c e m e n t .............................
( c ) P e n a ltie s a n d li a b i l i t i e s .......................................

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S e c . 2 2 6 .2 — D e f in it io n s a n d R u l e s o f C o n s t r u c ­
t i o n ...............................................................................................
( a ) A c t .......................... ; ......................................................
( b ) A d v e r t i s e m e n t ..........................................................
(c ) A g r i c u l t u r a l p u r p o s e . ..........................................
( d ) A m o u n t f i n a n c e d ....................................................
( e ) A n n u a l p e r c e n t a g e r a t e .......................................
( f ) A r r a n g e f o r t h e e x te n s io n o f c r e d i t .............
(g ) B illin g c y c l e ...............................................................
( h ) B o a r d .............................................................................
( i) C a s h p r i c e ...................................................... ............
( j ) C o m p a r a t i v e I n d e x o f C r e d i t C o s t .............
( k ) C o n s u m e r c r e d i t o r c o n s u m e r l o a n ............
(1) C r e d i t . . . ......................................................................
( m ) C r e d i t o r ....... ...............................................................
(n ) C r e d i t s a l e ...................................................................
( o ) C u s t o m e r .. - .............................................................. ..
( p ) D w e l l i n g ........................ .............................................
( q ) F i n a n c e c h a r g e .........................................................
( r ) O p e n e n d c r e d i t .......................................................
(s ) O r g a n i z a t i o n ..............................................................
( t ) P e r i o d . . - ......................................................................
( u ) P e r io d i c r a t e ..............................................................
(v ) P e r s o n ...........................................................................
(w ) R e a l p r o p e r t y . . . ....................................................
( x ) R e a l p r o p e r t y t r a n s a c t i o n .................................
( y ) R e s i d e n c e ....................................................................
( z ) S e c u r ity i n te r e s t a n d s e c u r i t y ..........................
( a a ) S t a t e ...............................: ..............................................
( b b ) O m is s io n o f w o r d “ c o n s u m e r ” .....................
( c c ) C o n s u m m a t i o n o f t r a n s a c t i o n ........................
( d d ) C a p t i o n s a n d c a t c h l i n e s . . . .............................

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S e c . 2 2 6 .3 — E x e m p t e d T r a n s a c t io n s ..........................
( a ) B u s in e s s o r g o v e r n m e n t a l c r e d i t ...................
( b ) C e r t a i n tr a n s a c t i o n s i n s e c u r it y o r c o m ­
m o d iti e s a c c o u n t s .............................................
(c ) N o n -re a l p ro p e rty c re d it o v e r $ 2 5 ,0 0 0 ...
( d ) C e r t a i n p u b l i c u t i l i t y b i l l s .................................

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S e c . 2 2 6 .4 — D e t e r m in a t io n o f F in a n c e C h a r g e .
( a ) G e n e r a l r u l e ..............................................................
( b ) I te m iz e d c h a r g e s e x c l u d a b l e . . ' . .....................
(c ) L a t e p a y m e n t , d e lin q u e n c y , d e f a u lt, a n d
r e i n s t a t e m e n t c h a r g e s .....................................
( d ) O v e r d r a f t c h a r g e s ..................................................
(e ) E x c lu d a b le c h a r g e s , r e a l p r o p e r t y t r a n s ­
a c t io n s . .*............................... .................................
( f ) P r o h i b i t e d o f f s e ts ....................................................
(g ) D e m a n d o b l i g a t i o n s .............................................
(h ) C o m p u ta tio n o f in s u ra n c e p r e m iu m s .. . .

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(c)
(d )
(e )
(f)
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(i)-

A d d i t i o n a l i n f o r m a t i o n ......................................
M u ltip le c r e d i t o r s ; j o i n t d i s c l o s u r e .............
M u ltip le c u s t o m e r s ; d is c l o s u r e t o o n e . . .
U n k n o w n i n f o r m a t i o n e s t i m a t e ....................
E f f e c t o f s u b s e q u e n t o c c u r r e n c e ...................
O v e r s t a t e m e n t..........................................................
P r e s e r v a t i o n a n d in s p e c t i o n o f e v id e n c e
. o f c o m p l i a n c e ......................................................
( j ) P e r c e n ta g e r a t e a s d o lla r s p e r h u n d r e d . . .
( k ) T r a n s i t i o n p e r i o d ..................................................

S e c . 2 2 6 .7 — O p e n E n d C r e d it A c c o u n t s — S p e ­
c i f ic D i s c l o s u r e s ................................................................
(a ) O p e n in g n e w a c c o u n t ..........................................
( b ) P e r io d i c s ta t e m e n t s r e q u i r e d ..........................
(e ) L o c a t i o n o f d is c l o s u r e s ......................................
(d ) F i n a n c e c h a r g e im p o s e d a t ti m e o f t r a n s ­
a c t i o n ...................................... '................................
(e ) C h a n g e i n t e r m s ......................................................
( f ) O p e n e n d c r e d i t a c c o u n t s e x is t in g o n
J u l y 1, 1 9 6 9 ...........................................................
S e c . 2 2 6 .8 — C r e d i t O t h e r T h a n O p e n E n d —
S p e c if i c D i s c l o s u r e s .......................................................
( a ) G e n e r a l r u l e ..............................................................
( b ) D is c lo s u r e s i n s a le a n d n o n s a l e c r e d i t . . .
(c ) C r e d i t s a l e s ................................................................
( d ) L o a n s a n d o t h e r n o n s a le c r e d i t .....................
(e ) F i n a n c e c h a r g e p a y a b l e s e p a r a t e l y o r
w i t h h e l d ; r e q u i r e d d e p o s it b a l a n c e s . . .
( f ) F i r s t lie n t o f in a n c e c o n s t r u c t i o n o f
d w e llin g ....................... ...........................................
(g ) O r d e r s b y m a il o r t e l e p h o n e ...........................
( h ) S e rie s o f s a le s ...........................................................
(i) A d v a n c e s u n d e r l o a n c o m m i t m e n t s ...........
( j ) R e f in a n c in g , c o n s o l i d a t i n g o r i n c r e a s in g .
( k ) ' A s s u m p t i o n o f a n o b l i g a t i o n ..........................
(1) D e f e r r a l s o r e x te n s io n s ......................................
(m ) S e rie s o f s in g le p a y m e n t o b l i g a t i o n s ..........
( n ) P e r m i s s ib le p e r io d ic s t a t e m e n t s .....................
( o ) D i s c o u n t f o r p r o m p t p a y m e n t .......................

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S e c . 2 2 6 .9 — R i g h t T o R e s c in d C e r t a in T r a n s ­
a c t i o n s .......................................................................................
( a ) G e n e r a l r u l e ......................................................
( b ) N o t i c e , o p p o r t u n i t y t o r e s c i n d ............
( c ) D e l a y o f p e r f o r m a n c e ......................................... *
.
( d ) E f f e c t o f r e s c is s io n .................................................
(e ) W a i v e r o f r i g h t o f r e s c i s s i o n ..........................
( f ) J o i n t o w n e r s h i p ......................................................
(g ) E x c e p tio n s t o g e n e r a l r u l e ...............................

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18
18
18
18
18

S e c . 2 2 6 .1 0 — A d v e r t is in g C r e d it T e r m s .................
( a ) G e n e r a l r u l e ..............................................................
( b ) C a t a l o g s a n d m u lti - p a g e a d v e r t i s e m e n t s .
(c ) A d v e r tis in g o f o p e n e n d c r e d i t .....................
( d ) A d v e r tis in g o f c r e d it o t h e r t h a n o p e n e n d

19
19
19
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S e c . 2 2 6 .1 1 — C o m p a r a t iv e I n d e x o f C r e d i t C o s t
f o r O p e n E n d C r e d i t .......... ..........................................
S e c . 2 2 6 .5 — D e t e r m in a t io n o f A n n u a l P e r c e n t ­
( a ) G e n e r a l r u l e ..............................................................
a g e R a t e ...................................................................................
7
(b ) C o m p u ta tio n o f C o m p a ra tiv e I n d e x o f
(a ) G e n e ra l ru le — o p e n e n d c re d it a c c o u n ts
7
C r e d i t C o s t ...........................................................
8
( b ) G e n e r a l r u l e — o t h e r c r e d i t .....................
(c ) F o r m o f d is c l o s u r e ...................... .........................
( c ) C h a r t s a n d t a b l e s ...................................................
8
( d ) M i n o r i r r e g u l a r i t i e s ...............................................
9
S e c . 2 2 6 .1 2 — E x e m p t i o n o f C e r t a in S t a t e R e g u ­
(e ) A p p r o x i m a t i o n o f a n n u a l p e r c e n t a g e
l a t e d T r a n s a c t i o n s .........................................................
r a t e — o t h e r c r e d i t ........................................................■.............. 9
( a ) E x e m p ti o n s f o r S t a t e r e g u l a t e d t r a n s ­
a c t i o n s ......................................................................
S e c . 2 2 6 .6 — G e n e r a l D i s c l o s u r e R e q u ir e m e n t s .
9
( b ) P r o c e d u r e s a n d c r i t e r i a .......................................
( a ) D is c l o s u r e s ; g e n e r a l r u l e ...................................
9
S t a t u t o r y A p p e n d i x ..................................................................
( b ) I n c o n s i s t e n t S t a t e r e q u i r e m e n t s .....................
10

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REGULATION

Z
(12 CFR 226)
Effective July 1,1969

TRUTH IN LENDING
REGULATION *
SEC TIO N 226.1— A U T H O R IT Y , SCOPE,
PURPOSE, ETC.
(a)
Authority, scope, and purpose. (1) This Part
comprises the regulations issued by the Board of
Governors of the Federal Reserve System pursuant
to Title I (Truth in Lending Act) and Title V
(General Provisions) of the Consumer Credit Pro­
tection Act (Public Law 90-321; 82 Stat. 146 et
seq.) Except as otherwise provided herein, this
Part applies to all persons who in the ordinary
coursc of business regularly extend, or offer to
extend, or arranges, or offer to arrange, for the
extension of consumer credit as defined in para­
graph (k ) of § 226.2.
(2)
This Part implements the Act, the purpose
of which is to assure that every customer who has
need for consumer credit is given meaningful in­
formation with respect to the cost of that credit
which, in most cases, must be expressed in the
dollar amount of finance charge, and as an an­
nual percentage rate computed on the unpaid
balance of the amount financed. Other relevant
credit information must also be disclosed so that
the customer may readily compare the various
credit terms available to him from different sources
and avoid the uninformed use of credit. This Part
* This text corresponds to the Code o f Federal Regu­
lations, Title 12, Chapter II, Part 226, cited as 12 CFR
226. The words “this Part”, as used herein, mean Regu­
lation Z,

3

also implements the provision of the Act under
which, a customer has a right in certain circum­
stances to cancel a credit transaction which in­
volves a lien on his residence. Advertising of
consumer credit terms must comply with specific
requirements, and certain credit terms may not
be advertised unless the creditor usually and cus­
tomarily extends such terms. Neither the Act nor
this Part is intended to control charges for con­
sumer credit, or interfere with trade practices ex­
cept to the extent that such practices may be in­
consistent with the purpose of the Act.
(b)
Administrative enforcement. (1) As set forth
more fully in section 108 of the Act, administra­
tive enforcement of the A ct and this part with
respect to certain creditors is assigned to the
Comptroller of the Currency, Board of Directors
of the Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board (acting directly
or through the Federal Savings and Loan Insur­
ance Corporation), Director of the Bureau of Fed­
eral Credit Unions, Interstate Commerce Commis­
sion, Civil Aeronautics Board, Secretary of Agri­
culture, and Board of Governors of the Federal
Reserve System.
(2)
Except to the extent that administrative en­
forcement is specifically committed to other author­
ities, compliance with the requirements imposed
under the Act and this part w ill be enforced by
the Federal Trade Commission.

REGULATION Z

§ 2 2 6 .2

(c)
Penalties and liabilities. Section 112 of the'
Act provides for criminal liability for willful and
knowing failure to comply with any requirement
imposed under the Act and this Part, and section
1 130 of the Act provides for civil liability on the
^part of any creditor who fails to disclose any in­
formation required under Chapter 2 of the Act
and under the corresponding provisions of this
Part. Pursuant to section 108 of the Act, viola­
tions of the Act or this Part constitute violations
of other Federal laws which may provide further
penalties.
SECTION 226.2— D E F IN IT IO N S A N D
RULES OF C O NSTRUCTIO N
For the purposes of this Part, unless the context
indicates otherwise, the following definitions and
rules of construction apply:
(a) “Act” refers to the Truth in Lending Act
(Title I of the Consumer Credit Protection Act).
(b) “Advertisement” means any commercial
message in any newspaper, magazine, leaflet, flyer
or catalog, on radio, television or public address
system, in direct mail literature or other printed
material, on any interior or exterior sign or dis­
play, in any window display, in any point-of-transaction literature or price tag which is delivered or
made available to a customer or prospective cus­
tomer in any manner whatsoever.
(c) “Agricultural purpose” means a purpose re­
lated to the production, harvest, exhibition, mar­
keting, transportation, processing, or manufacture
of agricultural products by a natural person who
cultivates, plants, propagates, or nurtures those'
agricultural products. “Agricultural products” in­
cludes agricultural, horticultural, viticultural, and
dairy products, livestock, wildlife, poultry, bees,
forest products, fish and shellfish, and any products
thereof, including processed and manufactured
products, and any and all products raised or pro­
duced on farms ancl any processed or manufac­
tured products thereof.
(d) “Amount financed” means the amount of
credit of which the customer will have the actual
use determined in accordance with paragraphs
(c)(7) and (d)(1) of § 226.8.
(e) “Annual percentage rate” means the annual
percentage rate, of finance charge determined in
accordance with § 226.5.
(f) “Arrange for the extension of credit” means
to provide or offer to provide consumer credit

4

which is or will be extended by another person
under a business or other relationship pursuant to
which the person arranging such credit receives
or will receive a fee, compensation, or other con­
sideration for such service or has knowledge of
the credit terms and participates in the preparation
of the contract documents required in connection
with the extension of credit. It does not include
honoring a credit card or similar device where
no finance charge is imposed at the time of that
transaction.
(g) “Billing cycle” means the time interval be­
tween regular periodic billing statement dates.
Such intervals may be considered equal intervals
of time unless a billing date varies more than
4 days from the regular date.
(h) “Board” refers to the Board of Governors
of the Federal Reserve System.
(i) “Cash price” means the price at which the
creditor offers, in the ordinary course of business,
to sell for cash the property or services which are
the subject of a consumer credit transaction. It
may include the cash price of accessories or serv­
ices related to the sale such as delivery, installa­
tion, alterations, modifications, and improvements,
and may include taxes to the extent imposed on
the cash sale, but shall not include any other
charges of the types described in § 226.4.(j) “Comparative Index of Credit Cost” means
the relative measure of the cost of credit under
an open end credit account, computed in accord­
ance with § 226.11, and is the expression of the
“average effective annual percentage rate of re­
turn” and the “projected rate of return” which
appear in section 127(a)(5) of the Act.
(k) “Consumer credit” means credit offered or
extended to a natural person, in which the money,
property, or service which is the subject of the
transaction is primarily for personal, family, house­
hold, or agricultural purposes and for which
either a finance charge is or may be imposed or
which, pursuant to an agreement, is or may be
payable in more than 4 instalments. “Consumer
loan” is one type of “consumer credit.”
(1 )
“Credit” means the right granted by a
creditor to a customer to defer payment of debtj
incur debt and defer its payment, or purchase
property or services and defer payment therefor.
(See also paragraph (bb) of this section.)
(m) “Creditor” means a person who in the or-,
dinary course of business regularly extends or

§ 2 2 6 .3

REGULATION. 2

arranges for the extension of consumer credit, or
offers to extend or arrange for the extension of
such crcdit.
(n) “Credit sale” means any sale with respect
to which consumer credit is extended or arranged
by the seller. The term includes any contract in
the form of a bailment or lease if the bailee or
lessee contracts to pay as compensation for use a
sum substantially equivalent to or in excess of
the aggregate value of the property and services
involved and it is agreed that the bailee or lessee
w ill become, or for no other or for a nominal
consideration has the option to become, the owner
of the property upon full compliance with his
obligations under the contract.
(o)
“Customer*’ means a natural person to
whom consumer credit is offered or to whom it
is or w ill be extended, and includes a comaker,
endorser, guarantor, or surety for such natural
person who is or may be obligated to repay the
extension of consumer credit.
(p) “Dwelling” means a residential-type struc­
ture which is real property and contains one or
more family housing units, or a residential con­
dominium unit wherever situated.
(q) “Finance ehargc” means the cost of credit
determined in accordance with § 226.4.
(r) “Open end credit” means consumer credit
extended on an account pursuant to a plan under
which (1) the creditor may permit the customer to
make purchases or obtain loans, from time to time,
directly from the creditor or indirectly by use of
a credit card, check, or other device, as the plan
may provide; (2) the customer has the privilege of
paying the balance in full or in instalments; and
(3) a finance charge may be computed by the
creditor from time to time on an outstanding
unpaid balance. The term does not include nego­
tiated advances under an open end real estate
mortgage or a letter of credit.
(s) “Organization” means a corporation, trust,
estate, partnership, cooperative, association, gov­
ernment, or governmental subdivision, agency, or
instrumentality.
(t) “Period” means a day, week, month, or
other subdivision of a year.
(u) “Periodic rate” means a percentage rate of
finance charge which, under an open end credit
plan, is or may be imposed by a creditor against
a balance for a period. (See also § 226.5(a)(3).)
(v) “Person” means a natural person or an or­
ganization.

5

(w) “Real property” means property which is
real property under the law of the State in which
it is located.
(x) “Real property transaction” means an ex­
tension of credit in connection with which a secur­
ity interest in real property is or will be retained
or acquired.
(y) “Residence”, means any real property in
which the customer resides or expects to reside.
The term includes a parcel of land on which the
customer resides or expects to reside.
(z) “Security interest” and “security” mean any
interest in property which secures payment, or
performance of an obligation. The terms include,
but are not limited to, security interests under the
Uniform Commercial Code, real property mort­
gages, deeds of trust, and other consensual or con­
fessed liens whether or not recorded, mechanic’s,
materialmen’s, artisan’s, and other similar liens,
vendor’s liens in both real and personal property,
the interest of a seller in a contract for the sale
of real property, any lien on property arising by
operation of law, and any interest in a lease when
used to secure payment or performance of an
obligation.
(aa) “State” means any State, the District of
Columbia, the Commonwealth of Puerto Rico, and
any territory or possession of the United States.
(bb) Unless the context indicates otherwise,
“credit” shall be construed to mean “consumer
credit,” “loan” to mean “consumer loan,” and
“transaction” to mean “consumer credit trans­
action.”
(cc) A transaction shall be considered consum­
mated at the time a contractual relationship is
created between a creditor and a customer ir­
respective of the time of performance of either
party.
(dd) Captions and catchlines are intended solely
as aids to convenient reference, and no inference
as to the intent of any provision of this part may
be drawn from them.

SEC TIO N 226.3— E X E M P TE D
TRAN SA C TIO N S
This Part does not apply to the following:
(a)
Business or governmental credit. Extensions
of credit to organizations, including governments,
or for business or commercial purposes, other
than agricultural purposes.

§ 226.4

REGULATION Z

(b) Certain transactions in security or commodi­
fies accounts. Transactions in securities or com­
modities accounts with a broker-dealer registered
with the Securities and Exchange Commission.
(c) Non-real property credit over $25,000.
Credit transactions, other than real property trans­
: actions, in which the amount financed1 exceeds
$25,000, or in which the transaction is pursuant
to an express written commitment by the creditor
to extend credit in excess of $25,000.
(d) Certain public utility bills. Transactions
under public utility tariffs involving services pro­
vided through pipe, wire, or other connected fa­
cilities, if the charges for such public utility serv­
ices, the charges for delayed payment, and any
discount allowed for early payment are filed with,
reviewed by, or regulated by an agency of the
Federal Government, a State, or a political sub­
division thereof.

in connection with 8 any credit transaction unless
(i) the insurance coverage is not required by
the creditor and this fact is clearly and con­
spicuously disclosed in writing to the customer;
and
(ii) any customer desiring such insurance cov­
erage gives specific dated and separately signed
affirmative written indication of such desire
after receiving written disclosure to him of the
cost of such insurance.
(6) Charges or premiums for insurance, written
in connection with * any credit transaction, against
loss of or damage to property or against liability
arising out of the ownership or use of property,
unless a clear, conspicuous, and specific statement
in writing is furnished by the creditor to the cus­
tomer setting forth the cost of the insurance if
obtained from or through the creditor and stating
that the customer may choose the person through
which the insurance is to be obtained.5
SECTION 226.4— DETERM IN A TIO N OF
(7) Premium or other charge for any other
FIN A N C E CHARGE
guarantee or insurance protecting the creditor
(a)
General rule. Except as otherwise provided against the customer’s default or other credit loss..
(8) Any charge imposed by a creditor upon
in this section, the amount of the finance charge
another creditor for purchasing or accepting an
in connection with any transaction shall be de­
obligation of a customer if the customer is re­
termined as the sum of all charges, payable di­
quired to pay any part of that charge in cash, as.
rectly or indirectly by the customer, and imposed
an addition to the obligation, or as a deduction
directly or indirectly by the creditor as an inci­
from the proceeds of the obligation.
dent to or as a condition of the extension of
(b)
Itemized charges excludable. If itemized and
credit, whether paid or payable by the customer,
disclosed to the customer, any charges of the fol­
the seller, or any other person on behalf of the
lowing types need not be included in the finance
customer to the creditor or to a third party, in­
charge:
cluding any of the following types of charges:
(1)
Fees and charges prescribed by law which
(1) Interest, time price differential, and any
actually are or will be paid to public officials for
amount payable under a discount or other system
determining the existence of or for perfecting or
of additional charges.
releasing or satisfying any security related to the
(2) Service, transaction, activity, or carrying
credit transaction.
charge.2
(3) Loan fee, points, finder’s fee, or similar
3 A policy of insurance owned b y the customer, which
is assigned to the creditor or otherwise made payable to
charge.
the creditor to satisfy a requirement imposed by the
(4) Fee for an appraisal, investigation, or
creditor, is not insurance “ written in connection with"
credit report.
a credit transaction if the policy was not purchased by the
customer for the purpose of being used in connection with
(5) Charges or premiums for credit life, acci­
that extension of credit.
dent, health, or loss of income insurance, written
4 A policy of insurance owned by the customer, which
is assigned to the creditor o r otherwise made payable to
1 For this purpose, the amount financed is the amount
the creditor to satisfy a requirement imposed by the
which is required to be disclosed under § 226.8 ( c ) (7 ) , or
creditor, is not insurance “written in connection with” a
(d ) ( 1 ) , as applicable, or would be so required if the
credit transaction if the policy was not purchased by the
transaction were subject to this Part.
customer for the purpose of being used in connection
with that extension of credit.
_
r' A creditor’s reservation or exercise of the right to
refuse to accept an insurer offered by the customer, for
reasonable cause, does not require inclusion of the pre­
mium in the finance charge.

2 These charges include any charges imposed by the
creditor in connection with a checking account to the
extent that such charges exceed any charges the customer
is required to pay in conncction with such a n account
when it is not being used to extend credit.

6

§ 226.5

REGULATION Z

(g) Demand obligations. Obligations other than
those debited to an open end credit account which
are payable on demand shall be considered to have
a maturity of one-half year for the purpose of
computing the amount of the finance charge and
the annual percentage rate, except that where
such an obligation is alternatively payable upon
a stated maturity, the stated maturity shall be
used for the purpose of such computations.
(h) Computation of insurance premiums. If any
insurance premium is required to be included as
a part of the finance charge, the amount to be
included shall be the premium for coverage ex­
tending over the period of time the creditor will
require the customer to maintain such insurance.
For this purpose, rates and classifications appli­
cable at the time the credit is extended shall be
applied over the full time during which coverage
is required, unless the creditor knows or has reason
to know that other rates or classifications will be
applicable, in which case such other rates or classi­
fications shall be used to the extent appropriate.

(2) The premium payable for any insurance in
lieu of perfecting any security interest otherwise
required by the creditor in connection with the
transaction, if the premium does not exceed the
fees and charges described in subparagraph (1)
of this paragraph which would otherwise be pay­
able.
(3) Taxes not included in the cash price.
(4) License, certificate of title, and registration
fees imposed by law.
(c) Late payment, delinquency, default, and
reinstatement charges. A late payment, delin­
quency, default, reinstatement, or other such
charge is not a finance charge if imposed for actual
unanticipated late payment, delinquency, default
or other such occurrence.
(d) Overdraft charges. A charge imposed by a
bank for paying checks which overdraw or in­
crease an overdraft in a checking account is not
a finance charge unless the payment of such
checks and the imposition of such finance charge
were previously agreed upon in writing.
(e) Excludable charges, real property trans­
actions. The following charges in connection with
any real property transaction, provided they are
bona fide, reasonable in amount, and not for the
purpose of circumvention or evasion of this Part,
shall not be included in the finance charge with
respect to that transaction:

SECTION 226.5— DETERM INATION OF
A N N U A L PERCENTA G E RATE
(a) General rule— open end credit accounts.
The annual percentage rates for open end credit
accounts shall be computed so as to permit dis­
closure with an accuracy at least to the nearest
quarter of 1 per cent. Such rate or rates shall be
determined in accordance with 8 226.7(a)(4) for
purposes of disclosure before opening an account,
§ 226.10(c)(4) for purposes of advertising, and in
the following manner for purposes of disclosure
on periodic statements:
(1) Where the finance charge is exclusively the
product of the application of one or more periodic
rates
(i) by multiplying each periodic rate by the
number of periods in a year; or
(ii) at the creditor’s option, if the finance
charge is the result of the application of two
or more periodic rates, by dividing the total
finance charge for the billing cycle by the sum
of the balances to which the periodic rates were
applied and multiplying the quotient (expressed
as a percentage) by the number of billing cycles
in a year.
(2) W here the creditor imposes all periodic fi­
nance charges in amounts based on specified
ranges or brackets of balances, the periodic rate

(1) Fees or premiums for title examination, ab­
stract of title, title insurance, or similar purposes
and for required related property surveys.
(2) Fees for preparation of deeds, settlement
statements, or other documents.
(3) Amounts required to be placed or paid into
an escrow or trustee account for future payments
of taxes, insurance, and water, sewer, and land
rents.
(4) Fees for notarizing deeds and other docu­
ments.
(5) Appraisal fees.
(6) Credit reports.
(f) Prohibited offsets. Interest, dividends, or
other income received or to be received by the
customer on deposits or on investments in real
or personal property in which a creditor holds a
security interest shall not be deducted from the
amount of the finance charge or taken into con­
sideration in computing the annual percentage
rate.

7

§ 226.5

REGULATION Z

shall be determined by dividing the amount of the
finance charge for the period by the amount of
the median balance within the range or bracket
of balances to which it is applicable, and the an­
nual percentage rate shall be determined by multi­
plying that periodic rate (expressed as a percent­
age) by the number of periods in a year. Such
ranges or brackets of balances shall be subject
to the limitations prescribed in subdivision (iv) of
paragraph (c) (2) of this section.
(3)
Where the finance charge is or includes a
minimum, fixed, or other charge not due to the
application of a periodic rate, and
(i) exceeds 50 cents for a monthly or longer
billing cycle, or the pro rata part of 50 cents
for a billing cycle shorter than monthly, by
dividing the total finance charge for the billing
cycle by the amount of the balance to which
applicable and multiplying the quotient (ex­
pressed as a percentage) by the number of
billing cycles in a year; or
(ii) does not exceed 50 cents for a monthly
or longer billing cycle, or the pro rata part of 50
cents for a billing cycle shorter than monthly,
by multiplying each applicable periodic rate by
the number of periods in a year, irrespective of
the imposition of such minimum, fixed, or other
charge.
(b)
General rule— other credit. Except as other­
wise provided in this section, the annual percent­
age rate applicable to any extension of credit,
other than open end credit, shall be that nominal
annual percentage rate determined as follows:
(1) In accordance with the actuarial method of
computation so that it may be disclosed with an
accuracy at least to the nearest quarter of 1 per
cent. T he mathematical equation and technical
instructions for determining the annual percentage
rate in accordance with the requirements of this
paragraph are set forth in Supplement I to Regula­
tion Z which is incorporated in this Part by refer­
ence. Supplement I to Regulation Z may be ob­
tained from any Federal Reserve Bank or from
the Board in Washington D.C., 20551, upon
written request.
(2) A t the option of the creditor, by applica­
tion of the United States Rule so that it may be
disclosed with an accuracy at least to the nearest
quarter of 1 per cent. Under this rule, the finance
charge is computed on the unpaid balance for
the actual time the balance remains unpaid and
8

if the amount of a payment is insufficient to pay
the accumulated finance charge, the unpaid ac­
cumulated finance charge continues to accumulate
to be paid from the proceeds of subsequent pay­
ments and is not added to the amount financed.
(c)
Charts and tables. (1) The Regulation Z
Annual Percentage Rate Tables produced by the
Board may be used to determine the annual per­
centage rate, and any such rate determined from
these tables in accordance with instructions con­
tained therein will comply with the requirements of
this section. Volume I contains table FRB— 100-M
covering 1 to 60 monthly payments, table FRB—
200-M covering 61 to 120 monthly payments,
table FRB— 300-M covering 121 to 480 monthly
payments, and table FRB— 100-W covering 1 to
104 weekly payments. Volume I also contains
instructions for use of the tables in regular trans­
actions and most irregular transactions which in­
volve only odd first and final payments and odd
first payment periods. Volume II contains factor
tables and instructions for their use in connection
with the tables in Volume I in the computation of
annual percentage rates in any type of irregular
payment or payment period transaction and in
transactions involving multiple advances. Each
volume is available from the Board in Washing­
ton, D.C., 20551, and the Federal Reserve Banks.
(2)
Any chart or table other than the Board’s
Regulation Z Annual Percentage Rate Tables also
may be utilized for the purpose of determining the
annual percentage rate provided:
(i) It is prepared in accordance with the
general rule set forth in paragraph (b )(1 ) or (2)
of this section;
(ii) It bears the name and address of the per­
son responsible for its production, an identifica­
tion number assigned to it by that person which
shall be the same for each chart or table so
produced with like numerical content and con­
figuration and, if prepared for use in connection
with irregular transactions, an identification of
the method of computation (“Actuarial” or
“U.S. Rule”);
(iii) Except as provided in subdivision (iv) of
this subparagraph, it permits determination of
the annual percentage rate to the nearest onequarter of 1 per cent for the range of rates
covered by the chart or table; and
(iv) If applicable to ranges or brackets of
balances, it discloses the amount of the finance

§ 226.6

REGULATION Z

charge and the annual percentage rate on the
median balance within each range or bracket
of balances where a creditor imposes the same
finance charge for all balances within a speci­
fied range or bracket of balances, and provided
further that if the annual percentage rate deter­
mined on the median balance understates the
annual percentage rate determined on the lowest
balance in that range or bracket by more than
8 per cent of the rate on the lowest balance,
then the annual percentage rate for that range
or bracket shall be computed upon any balancc
lower than the median balance within that range
so that any understatement will not exceed
8 per cent of the rate on the lowest balance
within that range or bracket of balances.
(3)
In the event an error in disclosure of the
amount of a finance charge or an annual per­
centage rate occurs because of a corresponding
error in a chart or table acquired or produced in
good faith by the creditor, that error in disclosure
shall not, in itself, be considered a violation of
this Part provided that upon discovery of the
error, that creditor makes no further disclosure
based on that chart or table and promptly notifies
the Board or a Federal Reserve Bank in writing
of the error and identifies the inaccurate chart or
table by giving the name and address of the person
responsible for its production and its identification
number.
(d)
M inor Irregularities. In determining the an­
nual percentage rate a creditor may, at his option,
consider the payment irregularities set forth in
this paragraph as if they were regular in amount
or time, as applicable, provided .that the trans­
action to which they relate is otherwise payable in
equal instalments scheduled at equal intervals.
(1)
I f the period from the date on which the
finance charge begins to accrue and the date the
final payment is due is not less than 3 months in
the case of weekly payments, 6 months in the case
of biweekly or semimonthly payments, or 1 year
in the case of monthly payments, either or both
of the following:
(i) The amount of 1 payment other than any
downpayment is not more than 50 per cent
greater nor 50 per cent less than the amount of a
regular payment; or
(ii) The interval between the date on which
the finance charge begins to accrue and the date
the first payment is due is not less than 5 days for

9

an obligation otherwise payable in weekly in­
stalments, not less than 10 days for an obliga­
tion otherwise payable in biweekly or semi­
monthly instalments, or not less than 20 days
for an obligation otherwise payable in monthly
instalments.
(2)
I f the period from the date on which the
finance charge begins to accrue and the date the
final payment is due is less than 3 months in the
case of weekly payments, 6 months in the case of
biweekly or semimonthly payments, or 1 year in
the case of monthly payments, either or both of
the following:
(i) The amount of 1 payment other than any
downpayment is not more than 25 per cent
greater nor 25 per cent less than the amount of
a regular payment; or
(ii) The interval between the date on which
the finance charge begins to accrue and the
date the first payment is due is not less than
6 days for an obligation otherwise payable in
weekly instalments, not less than 12 days fo r
an. obligation otherwise payable in biweekly or
semimonthly instalments, or not less than 25
days for an obligation otherwise payable in
monthly instalments.
(e)
Approximation of annual percentage r a t e other credit. In an exceptional instance when cir­
cumstances may leave a creditor with no alterna­
tive but to determine an annual percentage rate
applicable to an extension of credit other than
open end credit by a method other than those
prescribed in paragraphs (b) or (c) of this section,
the creditor may utilize the constant ratio method
of computation provided such use is limited to the
exceptional instance and is not for the purpose of
circumvention or evasion of the requirements of
this Part. Any provision of State law authorizing or
requiring the use of the constant ratio method or
any method of computing a percentage rate other
than those prescribed in paragraphs (b) and (c) of
this section does not justify failure of the creditor
to comply with the provisions of those paragraphs,
as applicable.
SEC TIO N 226.6—G E N E R A L DISCLOSURE
R EQ U IR E M E N TS
(a)
Disclosures; general rule. The disclosures re­
quired to be given by this Part shall be made
clearly, conspicuously, in meaningful sequence, in
accordance with the further requirements of this
section, and at the time and in the terminology

REGULATION Z

§

prescribed in applicable sections. Where the terms
“finance charge” and “annual percentage rate” are
required to be used, they shall be printed more
conspicuously than other terminology required by
this Part. Except with respect to the requirements
of § 226.10, all numerical amounts and percent­
ages shall be stated in figures and shall be printed
in not less than the equivalent of 10 point type,
.075 inch computer type,' or elite size typewritten
numerals, or shall be legibly handwritten.
(b) Inconsistent State requirements. W ith re­
spect to disclosures required by this Part, State
law is inconsistent with the requirements of the
A ct and this Part, within the meaning of section
111(a) of the Act, to the extent that it
(1) Requires a creditor to make disclosures
different from the requirements of this Part with
respect to form, content, terminology, or time of
delivery;
(2) Requires disclosure of the amount of the
finance charge determined in any manner other
than that prescribed in § 226.4; or
(3) Requires disclosure of the annual percent­
age rate of the finance charge determined in any
mariner other than that prescribed in § 226.5.
(c) Additional information. A t the creditor’s
option, additional information or explanations may
be supplied with any disclosure required by this
Part, but none shall be stated, utilized, or placed
so as to mislead or confuse the customer or con­
tradict, obscure, or detract, attention from the
Information required by this Part to be disclosed.
A ny creditor who elects to make disclosures spec­
ified in any provision of State law which, under
paragraph (b) of this section, is inconsistent with
.the requirements of the Act and this Part may
(1) Make such inconsistent .disclosures on a
separate paper apart from the disclosures made
pursuant to this Part, or.
(2) Make such inconsistent disclosures on the
same statement on which disclosures required by
this Part are made; provided:
(i) A ll disclosures required by this Part ap­
pear separately and above any other disclosures,
(ii) Disclosures required by this Part are
identified by a clear and conspicuous heading
indicating that they are made in compliance
with Federal law, and
(iii) A ll inconsistent disclosures appear sepa­
rately and below a conspicuous demarcation
line, and are identified by a clear and con­

10

2 2 6 .6

spicuous heading indicating that the statements
made thereafter are inconsistent with, the dis­
closure requirements of the Federal Trqth in
Lending Act.
(d) Multiple creditors; joint disclosure. I f there
is more than one creditor in a transaction, each
creditor shall be clearly identified and shall be
responsible for making only those disclosures re­
quired by this Part which are within his knowledge
and the purview of his relationship with the cus­
tomer. I f two or more creditors make a joint dis­
closure, each creditor shall be clearly identified.
The disclosures required under paragraphs (b) and
(c) of § 226.8 shall be made by the seller if he
extends or arranges for the extension of credit.
Otherwise disclosures shall be made as required
under paragraphs (b) and (d) of § 226.8.
(e) M ultiple customers; disclosure to one: In
any transaction other than a transaction which
may be rescinded under the provisions of § 226.9,
if there is more than one customer, the creditor
need furnish a statement of disclosures required
by this Part to only one of them other than an
endorser, comaker, guarantor, or a similar party.
(f) Unknown information estimate. I f at the
time disclosures must be made, an amount or
other item of information required to be disclosed,
or needed to determine a required disclosure, is
unknown or not available to the creditor, and the
creditor has made a reasonable effort to ascertain
it, the creditor may use an estimated amount or
an approximation of the information, provided
the estimate or approximation is clearly identified
as such, is reasonable, is based on the best in­
formation available to the creditor, and is not
used for the purpose of circumventing or evading
the disclosure requirements of this Part.
(g) Effect of subsequent occurrence. I f informa­
tion disclosed in accordance with this Part is sub­
sequently rendered inaccurate as the result of any
act, occurrence, or agreement subsequent to the
delivery of the required disclosures, the inaccuracy
resulting therefrom does not constitute a violation
o f this Part.®
6 Such acts,- occurrences, or agreements include the
failure o f the customer to perform his obligations under
the contract- and such actions, by the creditor as may be
proper to protect his interests in such circumstances. Such
failure may result in the liability of the customer to pay
delinquency charges, collection costs, or expenses o f the
creditor for perfection or acquisition o f any security in­
terest! or amounts advanced by the creditor on behalf o f
the customer in connection with insurance, repairs to or'
preservation o f collateral.

§ 226.7

REGULATION Z

(h) Overstatement. The disclosure of the amount
o f the finance charge or a percentage which is
greater than the amount of the finance charge o r
percentage required to be disclosed under this
P art does not in itself constitute a violation of this
P art: Provided, T hat the overstatement is not for
the purpose of circumvention or evasion of dis­
closure requirements.

SECTION 226.7— O PEN EN D CR ED IT
ACCOUNTS—SPECIFIC DISCLOSURES

(i) Preservation and Inspection of evidence of
compliance. Evidence of compliance with the re­
quirements imposed under this Part, other than
advertising requirements under § 226.10, shall be
preserved by the creditor fo r a period of not less
than 2 years after the date each disclosure is re­
quired to be made. Each creditor shall, when
directed by the appropriate administrative enforce­
ment authority designated in section 108 of the
Act, permit that authority o r its duly authorized
representative to inspect its relevant records and
evidence of compliance with this Part.
(j) Percentage rate as dollars p e r hundred.
Prior to January 1, 1971, any rate required under
this Part to be disclosed as a percentage rate may,
at the option of the creditor, be expressed in the
form of the corresponding ratio of dollars per
hundred dollars using the term “dollars financc
charge per year per $100 of unpaid balance.” (For
example, an add-on finance charge of 4 per cent
per year on an obligation payable in 36 equal
monthly instalments is equivalent to an annual
percentage rate, rounded to the nearest quarter
o f 1 per cent, of 7.50 per cent which may be
stated as “$7.50 finance charge per year per $100
of unpaid balance.”)
(k) Transition period. A ny creditor who can
demonstrate that he has taken bona fide steps, prior
to July 1, 1969, to obtain printed forms which are
necessary to comply with requirements of this
P art may, until such forms are received but in no
event later than December 31, 1969, utilize exist­
ing supplies of printed forms fo r the purpose of
complying with the disclosure requirements of this
Part, other than the requirements of paragraph
(b) of § 226.9: Provided, That such forms are
altered or supplemented as necessary to assure that
all of the items of information the creditor is re­
quired to disclose to the customer are set forth
clearly and conspicuously.

il

(a) Opening new account. Before the first trans­
action is made on any open end credit account, the
creditor shall disclose to the customer in a single
written statement, which the customer may retain,
in terminology consistent with the requirements of
paragraph (b) of this section, each of the follow­
ing items, to the extent applicable:
(1) The conditions under which a finance charge
may be imposed, including an explanation of the
time period, if any, within which any credit extended
may be paid without incurring a finance charge.
(2) The method of determining the balance
upon which a finance charge may be imposed.
(3) The method of determining the amount of
of the finance charge, including the method of
determining any minimum, fixed, check service,
transaction, activity, or similar charge, which may
be imposed as a finance charge.
(4) Where one or more periodic rates may be
used to compute the finance charge, each such
rate, the range of balances to which it is applica­
ble, and the corresponding annual percentage rate
determined by multiplying the periodic rate by
the number of periods in a year.
(5) If the creditor so elects, the Comparative
Index of Credit Cost in accordance with § 226.11.
(6) The conditions under which any other
charges may be imposed, and the method by which
they will be determined.
(7) The conditions under which the creditor
may retain or acquire any security interest in any
property to secure the payment o f any credit ex­
tended on the account, and a description or identi­
fication of the type of the interest or interests
which may be so retained or acquired.
(8) The minimum periodic payment required.
(b) Periodic statements required. Except in the
case of an account which the creditor deems to
be uncollectable or with respect to which delin­
quency collection procedures have been instituted,
the creditor of any open end credit account shall
mail or deliver to the customer, for each billing
cycle at the end of which there is an outstanding
debit balance in excess of $1 in that account or
with respect to which a finance charge is imposed,
a statement or statements which the customer may
retain, setting forth in accordance with paragraph
(c) of this section each of the following items to
the extent applicable:

§ 226.7

REGULATION Z

(1) The outstanding balance in the account at
the beginning of the billing cycle, using the term
“previous balance.”
(2) The amount and date of each extension of
credit or the date such extension of credit is
debited to the account during the billing cycle and,
unless previously furnished, a brief identification 7
of any goods or services purchased or other ex­
tension of credit.
(3) The amounts credited to the account during
the billing cycle for payments, using the term
“payments,” and for other credits including returns,
rebates of finance charges, and adjustments, using
the term “credits,” and unless previously furnished,
a brief identification 8 of each of the items included
in such other credits.
(4) The amount of any finance charge, using
the term “finance charge,” debited to the account
during the billing cycle, itemized and identified to
show the amounts, if any, due to the application
of periodic rates and the amount of any other
charge included in the finance charge, such as a
minimum, fixed, check service, transaction, ac­
tivity, or similar charge,0 using appropriate de­
scriptive terminology.
(5) Each periodic rate, using the term “periodic
rate” (or “rates”), that may be used to compute
the finance charge (whether or not applied during
the billing cycle), and the range of balances to
which it is applicable.
(6) The annual percentage rate or rates deter­
mined under § 226.5(a), using the term “annual
percentage rate” (or “rates”), and, where there is
more than one rate, the amount of the balance to
which each rate is applicable. Where the creditor
of the open end credit account imposes finance
charges with respect to specific transactions dur­
ing the billing cycle, such charges shall be com­
bined with all other finance charges imposed
during the billing cycle, and the annual percent­
age rate to be disclosed shall be determined by:

(i) Dividing the sum of all of the finance
charges imposed during the billing cycle by
the sum of the balances to which the periodic
rates apply (or by the average of daily bal­
ances if a daily periodic rate is used), plus
the sum of the amounts financed to which
the specific transaction charges apply, and
(ii) Multiplying the quotient (expressed as a
percentage) by .the number of billing cycles
in a year.
(7) If the creditor so elects, the Comparative
Index of Credit Cost in accordance with § 226.11.
(8) The balance on which the finance charge
was computed, and a statement of how that bal­
ance was determined. If the balance is determined
without first deducting all credits during the billing
cycle, that fact and the amount of such credits
shall also be disclosed.
(9) The closing date of the billing cycle and
the outstanding balance in the account on that
date, using the term “new balance,” accompanied
by the statement of the date by which, or the
period, if any, within which, payment must be
made to avoid additional finance charges.
(c)
Location of disclosures. The disclosures re­
quired by paragraph (b) of this section shall be
made on the face of the periodic statement, on its
reverse side, or on the periodic statement supple­
mented by separate statement forms provided they
are enclosed together and delivered to the cus­
tomer at the same time, and further provided that
(1) The disclosure required by paragraph (b)(1)
of this section, the amounts or respective totals of
the amounts required to be disclosed under para­
graph (b)(2), (3), and (4) of this section, and the
disclosure required under paragraph (b)(6) and (9)
of this section shall appear on the face of the
periodic statement. If the amounts and dates of
the charges and credits required to be disclosed
under paragraph (b)(2) and (3) of this section are
not itemized on the face or reverse side of the
periodic statement, they shall be disclosed on a
separate statement or separate slips which shall
accompany the periodic statement and identify
each charge and credit and show the date and
amount thereof. If the disclosures required under
paragraph (b)(4) are not itemized on the face or
reverse side of the periodic statement, they shall
be disclosed on a separate statement which shall
accompany the periodic statement.
(2) The disclosures required by paragraph (b)(5)

" Identification may be made on an accompanying slip
or by symbol relating to an identification list printed on
the statement.
“ ■ 6 Identification may be made on an accompanying slip
o r by. symbol relating to an identification list' printed on
the statement.
"These charges include any charges imposed by the
creditor for the issuance, payment, or handling of checks,
for account maintenance or otherwise, to the extent that
such charges exceed any similar charges the customer is
required to pay when an account is not being used to
extend credit.

12

§ 226.8

REGULATION Z

and (6) of this section and a reference to the
amounts required to be disclosed under paragraph
(b)(4) and (8) of this section, if not disclosed to­
gether on the face or the reverse side of the peri­
odic statement, shall appear together on the face of
a single supplemental statement which shall accom­
pany the periodic statement.
(3) The face of the periodic statement shall
contain one of the following notices, as applicable:
“NOTICE: See reverse side for important informa­
tion” or “NOTICE: See accompanying statement(s)
for important information” or “NOTICE: See re­
verse side and accompanying statement(s) for
important information;” and
(4) The disclosures shall not be separated so as
to confuse or mislead the customer or obscure or
detract attention from the information required
to be disclosed.
(d) Finance chargc imposed at time of trans­
action. Any creditor, other than the creditor of
the open end credit account, who imposes a fi­
nance charge at the time of honoring a customers
credit card, any other device, or form of identifi­
cation for a purchase of property or services or
for a cash advance to be debited to the customer's
open end credit account shall make the disclosures
required under paragraphs (b)(2) and (d) of § 226.8,
Credit other than open end— specific disclosures, at
the time of that transaction, and the annual per­
centage rate to be disclosed shall be determined
by dividing the amount of the finance charge by the
amount financed and multiplying the quotient (ex­
pressed as a percentage) by 12. If disclosure is
made under this paragraph, the creditor of the
open end credit account need make no further
disclosure with respect to the finance charge on
that transaction.
(e) Change in terms. If any change is to be
made in terms of an open end credit account plan
previously disclosed to the customer, the creditor
shall mail or deliver to the customer written dis­
closure of such proposed change not less than 30
days prior to the effective date of such change
or 30 days prior to the beginning of the billing
cycle within which such change will become effec­
tive, whichever is the earlier date.
(f) Open end credit accounts existing on July 1,
1969. In the case of any open end credit account
in existence and in which a balance remains un­
paid on July 1, 1969, and which balance is deemed
to be collectible and not subject to delinquency

collection procedures, the items described in para­
graph (a) of this section, to the extent applicable,
shall be disclosed in a notice mailed or delivered
to the customer not later than July 31, 1969. If
a customer subsequently utilizes such an account
in existence on July 1, 1969, in which no balance
remained unpaid on that date, and a notice re­
quired by paragraph (a) of this section has not
previously been furnished that customer, then such
notice shall be mailed or delivered to that customer
before or with the next billing on that account.
SECTION 226.8— CREDIT OTHER T H A N
OPEN END— SPECIFIC DISCLOSURES
(a) General rule. Any creditor when extending
credit other than open end credit shall, in accord­
ance with § 226.6 and to the extent applicable,
make the disclosures required by this section with
respcct 1o any transaction consummated on or
after July 1, 1969. Except as provided in para­
graphs (g) and (h) of this section, such disclosures
shall be made before the transaction is consum­
mated. At the time disclosures are made, the
creditor shall furnish the customer with a dupli­
cate of the instrument or a statement by which
the required disclosures are made and on which
the creditor is identified. All of the disclosures
shall be. made together on either
(1) The note or other instrument evidencing the
obligation on the same side of the page and above
or adjacent to the place for the customer’s signa­
ture; or
(2) One side of a separate statement which
identifies the transaction.
(b) Disclosures in sale and lionsale credit. In
any transaction subject to this section, the follow­
ing items, as applicable, shall be disclosed:
(1) The date on which the finance charge begins
to accrue if different from the date of the trans­
action.
(2) The finance charge expressed as an annual
percentage rate, using the term “annual percent­
age rate,” except in the case of a finance charge
(i) which does not exceed $5 and is applicable
to an amount financed not exceeding $75, or
(ii) which does not exceed $7.50 and is ap­
plicable to an amount financed exceeding $75.
A creditor may not divide an extension of credit
into two or more transactions to avoid the dis­
closure of an annual percentage rate, nor may
any other percentage rate be disclosed if none

13

§ 226.8

REGULATION Z

is stated in reliance upon subdivisions (i) or (ii)
of this subparagraph.
(3) The number, amount, and due dates or
periods of payments scheduled to repay the in­
debtedness and, except in the case of a loan se­
cured by a first lien or equivalent security interest
on a dwelling made to finance the purchase' of
that dwelling and except in the case of a sale of
a dwelling, the sum of such payments using the
term, “total- of payments.” 10 If any payment is
more than twice the amount of an otherwise regu­
larly scheduled equal payment, the creditor shall
identify the amount of such payment by the term
“balloon payment” and_ shall state the conditions,
if any, under which that payment may be re­
financed if not paid when due.
(4) The amount, or method of computing the
amount, of any default, delinquency, or similar
charges payable in the event of late payments.
(5) A description or identification of the type
of any security interest held or to be retained or
acquired by the creditor in connection with the
extension of credit, and a clear identification of
the property to which the security interest relates
or, if such property is not identifiable, an explana­
tion of the manner in which the creditor retains
or may acquire a security interest in such property
which the creditor is unable to identify. In any
such case where a clear identification of such prop­
erty cannot properly be made on the disclosure
statement due to the length of such identification,
the note, other instrument evidencing the obliga­
tion, or separate disclosure statement shall contain
reference to a separate pledge agreement, or a fi­
nancing statement, mortgage, deed of trust, or simi­
lar document evidencing the security interest, a
copy of which shall be furnished to the customer
by the creditor as promptly as practicable. If after­
acquired property will be subject to the security
interest, or if other or future indebtedness is or
may be secured by any such property, this fact
shall be clearly set forth in conjunction with the
description or identification of the type of security
interest held, retained or acquired.
(6) A description of any penalty charge that
may be imposed by the creditor or his assignee
for prepayment of the principal of the obligation
30 The disclosures required by this sentence need not
be made with respect to interim student loans made
pursuant to federally insured student loan programs
under Public Law 89-329, Title IV P a rt B of the Higher
Education A ct o f 1965, as amended.

14

(such as a real estate mortgage) with an explana­
tion of the method of computation of such penalty
and the conditions under which it may be imposed.
(7)
Identification of the method of computing
any unearned portion of the finance charge in the
event of prepayment of the obligation and a state­
ment of the amount or method of computation of
any charge that may be deducted from the amount
of any rebate of such unearned finance charge that
will be credited to the obligation or refunded to.
the customer.
(c) Credit sales. In the ease of a credit sale, in
addition to the items required to be disclosed
under paragraph ,(b) of this section, the following
items, as applicable, shall be disclosed:
(1) The cash price of the property or service
purchased, using the term “cash price.”
(2) The amount of the downpayment itemized,
as applicable, as downpayment in money, using
the term “cash downpayment,” downpayment in
property, using the term “trade-in” and the sum,
using the term “total downpayment.”
(3) The difference between the amounts de­
scribed in subparagraphs (1) and (2) of this para­
graph, using the term “unpaid balance of cash
price.”
(4) All other charges, individually itemized,
which are included in the amount financed but
which are not part of the finance chargc.
(5 )'The sum of the amounts determined under
subparagraphs (3) and (4) of this paragraph, using
the term “unpaid balance.”
(6)
Any amounts required to be deducted under
paragraph (e) of this section using, as applicable,
the terms “prepaid finance charge” and “required
deposit balance,” and, if both are applicable, the
total of such items using the term “total prepaid
finance charge and required deposit balance.”
(7) The difference between the amounts deter­
mined under subparagraphs (5) and (6) of this
paragraph, using the term “amount financed.”
(8) Except in the case of a sale of a dwelling:
(i) The total amount of the finance charge,
with description of each amount included, using
the term “finance charge,” and
(ii) The sum of the amounts determined
under subparagraphs (1), (4), and (8)(i) of this,
paragraph, using the term “deferred payment
price.”
(d) Loans and other nonsale credit. In the case
of a loan or extension of credit which is not a

§ 2 2 6 .8

REGULATION 2

credit sale, in addition to .the items required to
be disclosed under paragraph (b) of this section,
the following items, as applicable, shall be dis­
closed:
(1) The amount of credit, excluding items set
forth in paragraph (e) of this section, which will
be paid to the customer or for his account or
to another person on his behalf, including all
chargcs, individually itemized, which are included
in the amount of credit extended but which arc
not part of the finance charge, using the term
“amount financed.”
(2) Any amount referred to in paragraph (e)
of this section required to be excluded from the
amount in subparagraph (1) of this paragraph,
using, as applicable, the terms “prepaid finance
charge” and “required deposit balance,” and, if
both are applicable, the total of such items using
the term, “total prepaid finance charge and re­
quired deposit balance.”
(3) Except in the case of a loan secured by a
first lien or equivalent security interest on a dwell­
ing and made to finance the purchase of that
dwelling, the total amount of the finance charge,11
with description of each amount included, using
the term “finance charge.”
(e)
Finance chargc payable .separately or with­
held; required deposit balances. The following
amounts shall be disclosed and deducted in a
credit sale in accordance with paragraph (c)(6) of
this section, and in other extensions of credit shall
be excluded from the amount disclosed under
paragraph (d)(1) of this section, and shall be dis­
closed in accordance with paragraph (d)(2) of this
section:
(1) Any finance charge paid separately, in cash
or otherwise, directly or indirectly to the creditor
or with the creditor’s knowledge to another person,
or withheld by the creditor from the proceeds of
the credit extended.12
(2) Any deposit balance or any investment
which the creditor requires the customer to make,
maintain, or increase in a specified amount or
proportion as a condition to the extension of credit
except:
31 The disclosure required by this subparagraph need not
be made with respect to interim student loans m ade
pursuant to federally insured student loan programs under
Public Law 89-329, Title IV Part B of the Higher Educa­
tion Act of 1965, as amended.
“ Finance charges deducted o r excluded as provided
by this paragraph shall, nevertheless, be included in deter­
mining the financc charge under § 226.4.

15

(i) An escrow account under paragraph (e)(3)
of § 226.4,
(ii) A deposit balance which will be wholly
applied toward satisfaction of the customer’s
obligation in the transaction,
(iii) A deposit balance or investment which
was in existence prior to the extension of credit
and which is offered by the customer as secur­
ity for that extension of credit, and
(iv) A deposit balance or investment which
was acquired or established from the proceeds
of an extension of credit made for that purpose
upon written request of the customer.
( f ) First lien to finance construction of dwelling.
In any case where a first lien or equivalent security
interest in real property is retained or acquired by
a creditor in connection with the financing of the
initial construction of a dwelling, or in connection
with a loan to satisfy that construction loan and
provide permanent financing of that dwelling,
whether or not the customer previously owned the
land on which that dwelling is to be constructed,
such security interest shall be considered a first
lien against that dwelling to finance the purchase
of that dwelling.
(g) Orders by mail or telephone. If a creditor
receives a purchase order or a request for an ex­
tension. of credit by mail, telephone, or written
communication without personal solicitation, the
disclosures required under-this section may be
made any time not later than the date the first
payment is due, provided:
(1) In the case of credit sales, the cash price,
the downpayment, the finance charge, the de­
ferred payment price, the annual percentage rate,
and the number, frequency, and amount of pay­
ments are set forth in or are determinable from
the creditor’s catalog or other printed material
distributed to the public; or
(2) In the case of loans or other extensions of
credit, the amount of the loan, the finance charge,
the total scheduled payments, the number, fre­
quency, and amount of payments, and the an­
nual percentage rate for representative amounts or
ranges of credit are set forth in or are determin­
able from the creditor’s printed material distrib­
uted to the public, in the contract of loan, or in
other printed material delivered o r made avail­
able to the customer.
(h) Series of sales. If a credit sale is one of a
series of transactions made pursuant to an agree­

§ 226.8

REGULATION Z

ment providing for the addition of the amount
financed plus the finance charge for the current
sale to an existing outstanding balance, then the
disclosures required under this section for the
current sale may be made at any time not later
than the date the first payment for that sale is
due, provided:
(1) The customer has approved in writing both
the annual percentage rate or rates and the method
of treating any unearned finance charge on an
existing outstanding balance in computing the fi­
nance charge or charges; and
(2) The creditor retains no security interest in
any property as to which he has received pay­
ments aggregating the amount of the sale price
including any finance charges attributable thereto.
For the purposes of this subparagraph, in the case
of items purchased on different dates, the first
purchased shall be deemed first paid for, and in
the case of items purchased on the same date,
the lowest priced shall be deemed first paid for.

action subject'to the disclosure requirements of
this section, provided:
(1) The maturity of the advance does not exceed
2 years;
(2) No increase is made in the annual percent­
age rate previously disclosed; and
(3) All disclosures required by this Part were
made at the time the security interest was acquired
by the creditor or at any time prior to the first
advance made on or following the effective date
of this part.
(k) Assumption of an obligation. Any creditor
who accepts a subsequent customer as an obligor
under an existing obligation shall make the dis­
closures required by this part to that customer
before he becomes so obligated. If the obligation
so assumed is secured by a first lien or equivalent
security interest on a dwelling, and the assumption
is made for the subsequent customer to acquire
that dwelling, that obligation shall be considered
a loan made to finance the purchase of that dwell­
ing.
(i)
Advances under loan commitments. If a loan
(1)
Deferrals o r extensions. In the ease of an
is one of a series of advances made pursuant to
obligation other than an obligation upon which
a written agreement under which a creditor is or
the amount of the finance charge is determined
may be committed to extend credit to a customer
by the application of a percentage rate to the un­
up to a specified amount, and the customer has
paid balance, if the creditor imposes a charge or
approved in writing the annual percentage rate or
fee for deferral or extension, the creditor shall
rates, the method of computing the finance charge
disclose to the customer
or charges, and any other terms, the agreement
(1) The amount deferred or extended;
shall be considered a single transaction, and the
(2) The date to which, or the time period for
disclosures required under this section at the credi­
which payment is deferred or extended; and
tor’s option need be made only at the time the
(3) The amount of the charge or fee for the
agreement is executed.
deferral or extension.
(m) Series of single payment obligations. Any
(j) Refinancing, consolidating, or increasing. If
extension of credit involving a series of single pay­
any existing extension of credit is refinanced, or
ment obligations shall be considered a single trans­
two or more existing extensions of credit are con­
action subject to the disclosure requirements of
solidated, or an existing obligation is increased,
this Part.
such transaction shall be considered a new trans­
(n) Permissible periodic statements. If a creditor
action subject to the disclosure requirements of
transmits a periodic billing statem ent13 other than
this Part. For the purpose of such disclosure, any
a delinquency notice, payment coupon book, or
unearned portion of the finance charge which is
payment passbook, or a statement, billing, or
not credited to the existing obligation shall be
advice relating exclusively to amounts to be paid
added to the new finance charge and shall not be
by the customer as escrows for payment of taxes,
included in the new amount financed. Any increase
insurance, and water, sewer, and land rents, it
in an existing obligation to reimburse the creditor
shall be in a form which the customer may re­
for undertaking the customer’s obligation in per­
tain and shall set forth
fecting, protecting or preserving the security shall
not be considered a new transaction subject to
13 Any statement, notice, or reminder o f payment due
on any transaction payable in instalments which is mailed
this Part. Any advance for agricultural purposes
or delivered periodically to the customer in advance of the
made under an open end real estate mortgage or
due date o f the instalment shall be a periodic billing
similar lien shall not be considered a new trans­
statement for the purpose of this paragraph.

16

§ 226.9

REGULATION Z

(1) The annual percentage rate or rates; and
summation of that transaction or the date of de­
livery of the disclosures required under this sec­
(2) The date by which, or the period, if any,
tion a n d .a ll other material disclosures required
within which payment must be made in order
under this Part, whichever is later, by notifying
to avoid late payment or delinquency charges.
(o)
Discount for prompt payment. Except as the creditor by mail, telegram, or other writing
of his intention to do so. Notification by mail shall
provided under § 226.3(d), the amount of any
be considered given at the time mailed; notifica­
discount allowed for payment of a single pay­
tion by telegram shall be considered given at the
ment obligation on or before a specified date, or
charge for delaying payment after a specified date,
time filed for transmission; and notification by
other writing shall be considered given at the
shall be disclosed on the billing statement as a
time delivered to the creditor’s designated place
finance charge imposed on the least amount pay­
of business.
able in satisfaction of the obligation (amount
(b)
Notice of opportunity to rescind. Whenever
financed) for the period of time between the speci­
a customer has the right to rescind a transaction
fied date and the due date of the obligation, or
under paragraph (a) of this section, the creditor
in the absence of a designated due date, the date
shall give notice of that fact to the customer by
the billing cycle ends. Exccpt as provided in para­
graph (b)(2) of this section, each such billing state­
furnishing the customer with two copies of the
notice set out below, one of which may be used
ment shall, in addition to stating the amount of
by the customer to cancel the transaction. Such
that “finance charge,” using that term, state the
notice shall be printed in capital and lower case
“annual percentage rate,” using that term, com­
letters of not less than 12 point bold-faced type
puted so that it may be disclosed with an accuracy
on one side of a separate statement which identi­
to the nearest quarter of 1 per cent and determined
fies the transaction to which it relates. Such state­
by (1) dividing the amount of the finance chargc
ment shall also set forth the entire paragraph (d)
by the amount financed; (2) dividing the quotient
of this section, “Effect of rescission.” If such
so obtained by the number of days between the
paragraph appears on the reverse side of the state­
specified date and the due date of the obligation,
ment, the face of the statement shall state: “See
or in the absence of a designated due date, the
reverse side for important information about your
date the billing cycle ends; and (3) multiplying
right of rescission.” Before furnishing copies of the
the quotient so obtained (expressed as a percent­
notice to the customer, the creditor shall complete
age) by 365. (For example, a $1,000 purchase of
both copies with the name of the creditor, the
grain, subject to terms of 2 % /1 0 days, net 30
address of the creditor’s place of business, the
days, results in a “finance charge” of $20 and an
date of consummation of the transaction, and the
amount financed $980 for a period of 20 days.
date, not earlier than the third business day fol­
The “annual percentage rate” is 37.24% which
lowing the date of the transaction, by which the
may be rounded to 37.25% or 3TiA % .)
customer may give notice of cancellation.
Notice to customer required by Federal law:
SECTION 226.9— R IG H T TO RESCIND
CERTAIN TRANSACTIONS
(a)
General rule. Except as otherwise provided
in this section, in the case of any credit transaction
in which a security interest is or wilL be retained
or acquired in any real property which is used
or is expected to be used as the principal residence
of the customer, the customer shall have the right
to rescind that transaction until midnight of the
third business d a y 11 following the date of con14 F o r the purposes of this section, a business day is any
calendar day except Sunday, o r the following business
holidays: New Y ear’s Day, Washington’s Birthday,
Memorial Day, Independence Day, Labor D ay, Veterans’
Day, Thanksgiving, and Christmas.

17

You have entered into
a transaction on
(date)
which may result in a lien, mortgage, or other
security interest on your home. You have a legal
right under Federal law to cancel this transaction,
if you desire to do so, without any penalty or ob­
ligation within three business days from the above
date or any later date on which all material dis­
closures required under the Truth in Lending Act
have been given to you. I f you so cancel the trans­
action, any lien, mortgage, or other security in­
terest on your home arising from this transaction

§ 226.9

REGULATION Z

is automatically void. You are also entitled to re­
ceive a refund of any downpayment or other con­
sideration if you cancel. If you decide to cancci
this transaction, you may do so by notifying

this section, the customer shall tender the property
to the creditor, except that if return of the prop­
erty in kind would be impracticable or inequi­
table, the customer shall tender its reasonable
value. Tender shall be made at the location of the
property or at the residence of the customer, at
the option of the customer. If the creditor does
not take possession of the property within 10 days
after tender by the customer, ownership of the
property vests in the customer without obligation
on his part to pay for it,

(Name of creditor)
at (Address of creditor’s place of business) by
mail or telegram sent not later than midnight of

(date)

You may also use any

other form of written notice identifying the trans­
action if it is delivered to the above address not
later than that time. This notice may be used for
that purpose by dating and signing below.
I hereby cancel this transaction.

(date)

(e) Waiver of right of rescission. A customer
may modify or waive his right to rescind a trans­
action subject to the provisions of this section
provided:
(1) The extension of credit is needed in order
to meet a bona fide immediate personal financial
emergency of the customer;
(2) The customer has determined that a delay
of 3 business days in performance of the creditor’s
obligation under the transaction will jeopardize
the welfare, health or safety of natural persons
or endanger property which the customer owns or
for which he is responsible; and
(3) The customer furnishes the .creditor with
a separate dated and signed personal statement de­
scribing the situation requiring immediate remedy
and modifying or waiving his right of rescission.
The use of printed forms for this purpose is pro­
hibited.

(customer’s signature)

(c) Delay of performance. Except as provided
in paragraph (e) of this section, the creditor in any
transaction subject to this section shall not per­
form, or cause or permit the performance of,
any of the following actions until after the rescis­
sion period has expired and he has reasonably
satisfied himself that the customer has not exer­
cised his right of rescission:
(1) Disburse any money other than in escrow;
(2) Make any physical changes in the property
of the customer;
(3) Perform any work or service for the cus­
tomer; or
(4) Make any deliveries to the residence of the
customer if the creditor has retained or will ac­
quire a security interest other than one arising by
operation of law.

(f) Joint ownership. For the purpose of this
section, “customer” shall include two or more cus­
tomers where joint ownership is involved, and
the following shall apply:
(1) The right of rescission of the transaction may
be exercised by any one of them, in which case
the effect of rescission in accordance with para­
graph (d) of this section applies to all of them; and
(2) Any waiver of the right of rescission pro­
vided in paragraph (f) of this section is invalid
unless signed by all of them.

(d) Effect of rescission. When a customer exer­
cises his right to rescind under paragraph (a) of
this section, he is not liable for any finance or
other charge, and any security interest becomes
void upon such a rescission. Within 10 days after
receipt of a notice of rescission, the creditor shall
return to the customer any money or property
given as earnest money, downpayment, or other­
wise, and shall take any action necessary or ap­
propriate to reflect the termination of any security
interest created under the transaction. If the credi­
tor has delivered any property to the customer, the
customer may retain possession of it. Upon the
performance of the creditor’s obligations under

(g) Exceptions to general rule. This section does
not appiy to:
(1) The creation, retention, or assumption of
a first lien or equivalent security interest to finance
the acquisition of a dwelling in which the customer
resides or expects to reside.
(2) A security interest which is a first lien re­
tained or acquired by a creditor in connection with

18

§ 226.10

REGULATION Z

the financing o f the initial construction of the
residence of the customer, or in connection with a
loan committed prior to completion of the con­
struction of that residence to satisfy that construc­
tion loan and provide permanent financing of
that residence, whether or not the customer previ­
ously owned the land on which that residence is
to be constructed.
(3) A ny lien by reason of its subordination at
any time subsequent to its creation, if that lien
was exempt from the provisions of this section
when it was originally created.
(4) Any advance for agricultural purposes made
pursuant to paragraph (j) of § 226.8 under an open
end real estate mortgage or similar lien, provided
the disclosure required under paragraph (b) of
this section was made at the time the security
interest was acquired by the creditor or at any
time prior to the first advance made on or follow­
ing the cflective date of this Part.

appears, unless that statement discloses all of the
credit terms required to be stated under this sec­
tion. For the purpose of this subparagraph, cash
price is not a credit term.
(c) Advertising of open end credit. No adver­
tisement to aid, promote, or assist directly or in­
directly the extension of open end credit may set
forth any of the terms described in paragraph (a)
of § 226.7, the Comparative Index of Credit Cost,
or that no downpayment, a specified downpay­
ment, or a specified periodic payment is required
or any of the following items unless it also clearly
and conspicuously sets forth all the following
items in terminology prescribed under paragraph
(b) of § 226.7:
(1) An explanation of the time period, if any,
within which any credit extended may be paid
without incurring a finance charge.
(2) The method of determining the balance
upon which a finance charge may. be imposed.
(3) The method of determining the amount of
the finance charge, including the determination of
any minimum, fixed, check service, transaction,
activity, or similar charge, which may be imposed
as a finance charge.
(4) Where one or more periodic rates may be
used to compute the finance charge, each such
rate, the range of balances to which it is applica­
ble, and the corresponding annual percentage rate
determined by multiplying the periodic rate by
the number of periods in a year.
(5) The conditions under which any other
charges may be imposed, and the method by which
they will be determined.
(6) The minimum periodic payment required.
(d) Advertising of credit other than open end.
No advertisement to aid, promote, or assist di­
rectly or indirectly any credit sale including the
sale of residential real estate, loan, or other ex­
tension of credit, other than Open end credit,
subject to the provisions of this Part, shall state
(1) The rate of a finance charge unless it states
the rate of that charge expressed as an “annual
percentage rate,” using that term;
(2) The amount of the downpayment required
or that no downpayment is required, the amount
of any instalment payment, the dollar amount of
any finance charge, the number of instalments or
the period of repayment, or that there is no charge
for credit, unless it states all of the following
items in terminology prescribed under § 226.8:

SECTION 226.10— ADVERTISING
CRED IT TERMS
(a) General rale. N o advertisement to aid, pro­
mote, or assist directly or indircctly any extension
o f credit may state
(1) That a specific amount of credit or instal­
ment amount can be arranged unless the creditor
usually and customarily arranges or will arrange
credit amounts or instalments for that period and
in that amount; or
(2) That no downpayment or that a specified
downpayment will be accepted in connection with
any extension of credit, unless the creditor usually
and customarily accepts or will accept downpay­
ments in that amount.
(b) Catalogs and multi-page advertisements. If
a catalog or other multiple-page advertisement sets
forth or gives information in sufficient detail to
permit determination of the disclosures required
by this section in a table or schedule of credit
terms, such catalog or multiple-page advertisement
shall be considered a single advertisement pro­
vided:
(1) The table or schedule and the disclosures
made therein are set forth clearly and conspicu­
ously, and
(2) A ny statement of credit terms appearing in
any place other than in that table or schedule of
credit terms clearly and conspicuously refers to
the page or pages on which th at table or schedule

19

§§ 2 2 6 .1 1 -2 2 6 .1 2

REGULATION Z

(i) the cash price or the amount of the loan,
as applicable.
(ii) the amount of the downpayment required
o r that no downpayment is required, as ap­
plicable.
(iii) the number, amount, and due dates or
period of payments scheduled to repay the in­
debtedness if the credit is extended.
(iv) the amount of the finance charge ex­
pressed as an annual percentage rate. The ex­
emptions from disclosure of an annual percent­
age rate permitted in paragraph (b)(2) of § 226.8
shall not apply to this subdivision.
(v) Except in the case of the sale of a dwell­
ing or a loan secured by a first lien on a dwell­
ing to purchase that dwelling, the deferred pay­
m ent price or the sum of the payments, as
applicable.
SECTION 226.11— COMPARATIVE IN D EX
O F CREDIT COST FO R OPEN E N D CREDIT
(a) General rule. Any creditor who elects to
disclose the Comparative Index of Credit Cost on
open end credit accounts
(1) Shall compute the Comparative Index of
Credit Cost in accordance with paragraph (b) of
this section.
(2) Shall recompute the Comparative Index of
Credit Cost in accordance with paragraph (b) of
this section based upon any new open end credit
account terms to be adopted and shall disclose
the new Comparative Index of Credit Cost in
accordance with paragraph (c)(2) of this section
concurrently with the notice required under para­
graph (c) of § 226.7.
(3) Shall, when making such disclosure under
the provisions of subparagraphs (a)(5) and (b)(7)
o f § 226.7, make the disclosure to all open end
credit account customers; and
(4) Shall not utilize such disclosure so as to
mislead, or confuse the customer or contradict,
obscure, or detract attention from the required
disclosures.
(b) Computation of Comparative Index of
Credit Cost. The Comparative Index of Credit
Cost for each open end credit plan shall be com­
puted by applying the creditor’s terms of that
plan to the following hypothetical factors:
(1)
A single transaction in the amount of $100
is debited on the first day of a billing cycle to
an open end credit account having no previous
balance.

20

(2) The creditor imposes all finance, charges
including periodic, fixed, minimum or other
charges applicable to such account in amounts
and on dates consistent with his policy of impos­
ing such charges upon open end credit accounts.
(3) The exact amount of the required minimum
periodic payment is paid on the last day of each
subsequent and successive billing cycle until the
amount of the single transaction, together with
applicable finance charges, is paid in full.
(4) The Comparative Index of Credit Cost shall
be expressed and disclosed as a percentage ac­
curate to the nearest quarter of 1 per cent and
shall be determined by dividing the total amount
of the finance charges imposed by the sum of the
daily balances and multiplying the quotient so
obtained (expressed as a percentage) by 365.
(c)
Form of disclosure. Any creditor who elects
to disclose the Comparative Index of Credit Cost
shall:
(1) Make the disclosure in the form of the fol­
lowing statement: “Our Comparative Index of
Credit Cost under the terms of our open end
credit account plan is _ % per year, computed
on the basis of a single transaction of $100 debited
on the first day of a billing cycle to an account
having no previous balance, and paid in required
minimum consecutive instalments on the last day
of each succeeding billing cycle until the trans­
action and all financc charges are paid in full.
The actual percentage cost of credit on your ac­
count may be higher or lower depending on the
dates and amounts of charges and payments.”
(2) Disclose any newly computed Comparative
Index of Credit Cost in the form of the state­
ment prescribed in subparagraph (1) of this para­
graph, except that the statement shall be preceded
by the words “Effective as of
(date)
and the words “will be” shall be substituted for
the word “is” in the second line of the statement.
SECTION 226.12—EXEM PTION O F CERTAIN
STATE REGULATED TRANSACTIONS
(a) Exemption for State regulated transactions.
In accordance with the provisions of Supplement
II to Regulation Z (§ 226.12— Supplement), any
State may make application to the Board for ex­
emption of any class of transactions within that
State from the requirements of Chapter 2 of the
Act and the corresponding provisions of this P art;
Provided , That

§ 226.12

REGULATION Z

(1) Under the law of that State, that class of
transactions is subject to requirements substantially
similar to those imposed under Chapter 2 of the
Act and the corresponding provisions of this Part;
and
(2) There is adequate provision for enforce­
ment.
(b)
Procedures and criteria. On or before July
1, 1969, the Board will promulgate and publish

21

Supplement II to Regulation Z (§ 226.12— Sup­
plement) in which will be set forth, as established
by the Board, the procedures and criteria under
which any State may apply for the determination
provided for in paragraph (a) of this section. Upon
publication of Supplement II of Regulation Z ap­
plication may be made to the Board for such
determination.

REGULATION Z

STATUTORY APPENDIX

STATUTORY APPENDIX

more readily the various credit terms available to
him and avoid the uninformed use of credit.

Titles I and V o f A ct of May 29, 1968
§ 103. Definitions, and rules of construction
(a) The definitions and rules of construction set
forth in this section are applicable for the purposes
of this title.
(b) The term “Board” refers to the Board of
Governors of the Federal Reserve System.
(c) The term “organization” means a corpora­
tion, government or governmental subdivision or
agency, trust, estate, partnership, cooperative, or
association.
(d) The term “person” means a natural person or
an organization.
(e) The term “credit” means the. right granted
by a creditor to a debtor to defer payment of debt
or to incur debt and defer its payment.
(£) The term “creditor” refers only to creditors
who regularly extend, or arrange for the extension
of, credit for which the payment of a finance charge
is required, whether in connection with loans, sales
of property or services, or otherwise. The provisions
of this title apply to any such creditor, irrespective
of his or its status as a natural person or any type
of organization.
(g) The term “credit sale” refers to any sale with
respect to which credit is extended or arranged by
the seller. The term includes any contract in the
form of a bailment or lease if the bailee or lessee
contracts to pay as compensation for use a sum
substantially equivalent to or in excess of the ag­
gregate value of the property and services involved
and it is agreed that the bailee or lessee will become,
or for no other or a nominal consideration has the
option to become; the owner of the property upon
full compliance with his obligations under the con­
tract.
(h) The adjective “consumer”, used with refer­
ence to a credit transaction, characterizes the trans­
action as one in which the party to whom credit is
offered or extended is a natural person, and the
money, property, or services which are the subject
of the transaction are primarily for personal, fam­
ily, household, or agricultural purposes.
(i) The term “open end credit plan” refers to a
plan prescribing the terms of credit transactions
which may be made thereunder from time to time
and under the terms of which a finance charge may
be computed on the outstanding unpaid balance
from time to time thereunder.

§ 1. Short title of entire Act
This Act may be cited as the Consumer Credit
Protection Act.

T IT L E I — CO N SU M ER C R E D IT COST
DISCLOSURE

Chapter

Section

1 . G e n e r a l P r o v i s i o n s ........................................................
2. C r e d i t T r a n s a c t i o n s ......................................................
3 . C r e d i t A d v e r t i s i n g ........................................................

101
121
141

CHAPTER 1—GENERAL PROVISIONS
Sec.

101. Short title.
•102. Findings and declaration of purpose.
103. Definitions and rules of construction.
104. Exempted transactions.
105. Regulations.
106. Determination of finance charge.
107. Determination of annual percentage rate.
108. Administrative enforcement.
109. Views of other agencies.
110. Advisory committee.
111. Effect on other laws.
.
112. Criminal liability for willful and knowing violation.
113. Penalties inapplicable to governmental agencies.
114. Reports by Board and Attorney General.

§ 101. Short title
This title may be cited as the Truth in Lending
Act.
§ 102. Findings and declaration of purpose

The Congress finds that economic stabilization
would be enhanced and the competition among the
various financial institutions and other firms en­
gaged in the extension of consumer credit would be
strengthened by the informed use of credit. The in­
formed use of credit results from an awareness of
the cost thereof by consumers. It is the purpose of
this title to assure a meaningful disclosure of credit
terms so that the consumer will be able to compare

22

STATUTORY APPENDIX

REGULATION Z

including any o f the following types of charges
(j) The term “State” refers to any State, the
which are applicable:
Commonwealth o f Puerto Rico, the District of
(1) Interest, time price differential, and any
Columbia, and any territory or possession o f the
amount payable under a point, discount, o r
United States.
other system of additional charges.
(k) A ny reference to any requirement imposed
(2) Service or carrying charge.
under this, title or any provision thereof includes
(3) Loan fee, finder’s fee, or similar charge.
reference to the regulations o f the Board under this
(4) Fee for an investigation or credit report.
title or the provision thereof in question..
(5) Premium or other charge for any guaran­
(1)
The disclosure o f an amount or percentage
tee o r insurance protecting the creditor against
which is greater than the amount or percentage
the obligor’s default or other credit loss.
required to be disclosed under this title does not in
itself constitute a violation o f this tide.
(b) Charges or premiums for credit life, accident,
or health insurance written in connection with any
consumer credit transaction shall be included in the
finance charge unless
(1) the coverage of the debtor by the insur­
ance is not a factor in the approval by the
creditor of the extension of credit, and this:
fact is clearly disclosed in writing to the person
applying for or obtaining the extension of cred­
it; and
(2) in order to obtain the insurance in con­
nection with the extension of credit, the person
to whom the credit is extended must give spe­
cific affirmative written indication of his desire
to do so after written disclosure to him of the
cost thereof.
(c) Charges or premiums for insurance, written
in connection with any consumer credit transaction,
against loss of or damage to property or against
liability arising out of the ownership or use of prop­
erty, shall be included in the finance charge unless
§ 105. Regulations
a clear and specific statement in writing is furnished
The Board shall prescribe regulations to carry out
by the creditor to the person to whom the credit is
the purposes of this title. These regulations may
extended, setting forth the cost of the insurance if
contain such classifications, differentiations, or other
obtained from or through the creditor, and stating
provisions, and may provide for such adjustments
that the person to whom the credit is extended may
and exceptions for any class' o f transactions, as in
choose the person through which the insurance is
the judgment of the Board are necessary or proper
to be obtained.
to effectuate the purposes o f this title, to prevent
(d) If any of the following items is itemized and
circumvention or evasion thereof, or to facilitate
disclosed in accordance with the regulations of the
compliance therewith.
Board in connection with any transaction, then the
creditor need not include that item in the computa­
§ 106. Determination o f finance charge
tion of the finance charge with respect to that trans­
(a)
Except as otherwise provided in this section, action:
the amount o f the finance charge in connection with
(1) Fees and charges prescribed by law
any consumer credit transaction shall be determined
which actually are or will be paid to public
as the sum of. all charges, payable directly or in­
officials for determining the existence of or
directly by the person to whom the credit is ex­
for perfecting or releasing or satisfying any
tended, and imposed directly or indirectly by the
security related to the credit transaction.
(2) The premium payable for any insur­
creditor as an incident to the extension o f credit,
§ 104. Exempted transactions
This title does not apply to the following:
(1) Credit transactions involving extensions
o f credit for business or commercial purposes,
or to government or governmental agencies or
instrumentalities, or to organizations.
(2) Transactions in securities or commodi­
ties accounts by a broker-dealer registered
with the Securities and Exchange Commission.
(3) Credit transactions, other than real prop­
erty transactions, in which the total amount to
be financed exceeds $25,000..
(4) Transactions under public utility tariffs,
if the Board determines, that a State regulatory
body regulates the charges for the public utility
services involved, the charges for delayed pay­
ment, and any discount allowed for-early pay­
ment.

23

REGULATION Z

STATUTORY APPENDIX

ance in lieu of perfecting any security interest
otherwise required by the creditor in con­
nection with the transaction, if the premium
does not exceed the fees and charges described
in paragraph (1) which would otherwise be
payable.
(3) Taxes.
(4) Any other type of charge which is not
fo r credit and the exclusion of which from the
finance charge is approved by the Board by
regulation.
(e)
The following items, when charged in con­
nection with any extension of credit secured by an
interest in real property, shall not be included in the
computation of the finance charge with respect to
that transaction:
(1) Fees or premiums for title examination,
title insurance, or similar purposes.
(2) Fees for preparation of a deed, settle­
ment statement, or other documents.
(3) Escrows for future payments of taxes
and insurance.
(4) Fees for notarizing deeds and other
documents.
(5) Appraisal fees.
(6) Credit reports.

(2)
in the case of any extension of credit
under an open end credit plan, as the quotient
(expressed as a percentage) of the total finance
charge for the period to which it relates di­
vided by the amount upon which the finance
charge for that period is based, multiplied by
the number of such periods in a year.
(b) Where a creditor imposes the same finance
charge for balances within a specified range, the an­
nual percentage rate shall be computed on the me­
dian balance within the range, except that if the
Board determines that a rate so computed would
not be meaningful, or would be materially mislead­
ing, the annual percentage rate shall be computed
on such other basis as the Board may by regulation
require.
(c) The annual percentage rate may be rounded
to the nearest quarter of 1 per centum for credit
transactions payable in substantially equal install­
ments when a creditor determines the total finance
charge on the basis of a single add-on, discount,
periodic, or other rate, and the rate is converted
into an annual percentage rate under procedures
prescribed by the Board.
(d) The Board may authorize the use of rate
tables or charts which may provide for the dis­
closure of annual percentage rates which vary from
§ 107. Determination of annual percentage rate
the rate determined in accordance with subsection
(a)
The annual percentage rate applicable to any (a)(1)(A) by not more than such tolerances as the
extension of consumer credit shall be determined,
Board may allow. The Board may not allow a
tolerance greater than 8 per centum of that rate
in accordance with the regulations of the Board,
(1)
in the case of any extension of credit except to simplify compliance where irregular pay­
ments are involved.
other than under an open end credit plan, as
(e) In the case of creditors determining the an­
(A) that nominal annual percentage
nual percentage rate in a manner other than as
rate which will yield a sum equal to the
described in subsection (c) or (d), the Board may
amount of the finance charge when it is
authorize other reasonable tolerances.
applied to the unpaid balances of the
(f) Prior to January 1, 1971, any rate required
amount financed, calculated according to
under this title to be disclosed as a percentage rate
the actuarial method of allocating pay­
may, at the option of the creditor, be expressed in
ments made on a debt between the
the form of the corresponding ratio of dollars per
amount financed and the amount of the
hundred dollars.
finance charge, pursuant to which a pay­
ment is applied first to the accumulated
§ 108. Administrative enforcement
finance charge and the balance is applied
to the unpaid amount financed; or
(a)
Compliance with the requirements imposed
(B) the rate determined by any method
under this title shall be enforced under
(1)
section 8 of the Federal Deposit Insur­
prescribed by the Board as a method
which materially simplifies computation
ance Act, in the case of
(A) national banks, by the Comptrol­
while retaining reasonable accuracy as
ler of the Currency.
compared with the rate determined under
(B) member banks o f the Federal Re­
subparagraph (A).

24

STATUTORY APPENDIX

REGULATION Z

serve System (other than national banks),
by the Board.
(C)
banks insured by the Federal De­
posit Insurance Corporation (other than
members of the Federal Reserve System),
by the Board of Directors of the Federal
Deposit Insurance Corporation.
(2) section 5(d) of the Home Owners’ Loan
Act of 1933, section 407 of the National
Housing Act, and sections 6(i) and 17 of the
Federal Home Loan Bank Act, by the Federal
Home Loan Bank Board (acting directly or
through the Federal Savings and Loan Insur­
ance Corporation), in the case of any institu­
tion subject to any of those provisions.
(3) the Federal Credit Union Act, by the
Director of the Bureau of Federal Credit
Unions with respect to any Federal credit
union.
(4) the Acts to regulate commerce, by the
Interstate Commerce Commission with respect
to any common carrier subject to those Acts.
(5) the Federal Aviation Act of 1958, by
the Civil Aeronautics Board with respect to
any air carrier or foreign air carrier subject to
that Act.
(6) the Packers and Stockyards Act, 1921
(except as provided in section 406 of that Act),
by the Secretary of Agriculture with respect
to any activities subject to that Act.
(b) For the purpose of the exercise by any
agency referred to in subsection (a) of its powers
under any Act referred to in that subsection, a
violation of any requirement imposed under this
title shall be deemed to be a violation of a require­
ment imposed under that Act. In addition to its
powers under any provision of law specifically re­
ferred to in subsection (a), each of the agencies
referred to in that subsection may exercise, for the
purpose of enforcing compliance with any require­
ment imposed under this title, any other authority
conferred on it by law.
(c) Except to the extent that enforcement of the
requirements imposed under this title is specifically
committed to some other Government agency un­
der subsection (a), the Federal Trade Commission
shall enforce such requirements. For the purpose of
the exercise by the Federal Trade Commission of
its functions and powers under the Federal Trade
Commission Act, a violation of any requirement
imposed under this title shall be deemed a violation
25

of a requirement imposed under that Act. All of
the functions and powers of the Federal Trade
Commission under the Federal Trade Commission
A ct are available to the Commission to enforcc
compliance by any person with the requirements
imposed under this title, irrespective of whether
that person is engaged in commerce or meets any
other jurisdictional tests in the Federal Trade Com­
mission Act.
(d)
The authority of the Board to issue regula­
tions under this title does not impair the authority
of any other agency designated in this section to
make rules respecting its own procedures in enforc­
ing compliance with requirements imposed under
this title.
§ 109. Views of other agencies
In the exercise of its functions under this title,
the Board may obtain upon request the views of
any other Federal agency which, in the judgment of
the Board, exercises regulatory or supervisory func­
tions with respect to any class of creditors subject
to this title.
§ 110. Advisory committee
The Board shall establish an advisory committee
to advise and consult with it in the exercise of its
functions under this title. In appointing the mem-'
bers of the committee, the Board shall seek to
achieve a fair representation of the interests of
sellers of merchandise on credit, lenders, and the
public. The committee shall meet from time to
time at the call of the Board, and members thereof
shall be paid transportation expenses and not to
exceed $100 per diem.
§ 111. Effect on other laws
(a) This title does not annul, alter, or alTect, or
exempt any creditor from complying with, the laws
of any State relating to the disclosure of informa­
tion in connection with credit transactions, except
to the extent that those laws are inconsistent with
the provisions of this title or regulations thereunder,
and then only to the extent of the inconsistency.
(b) This title does not otherwise annul, alter
or affect in any manner the meaning, scopc or ap­
plicability of the laws of any State, including, but
not limited to, laws relating to the types, amounts
or rates of charges, or any element or elements of
charges, permissible under such laws in connection
with the extension or use of credit, nor does this

REGULATION Z

STATUTORY APPENDIX

title extend the applicability of those laws to any
class of persons or transactions to which they would
not otherwise apply.
. (c) In any action or proceeding in any court in­
volving a consumer credit sale, the disclosure of the
annual percentage rate as required under this title
in connection with that sale may not be received
as evidence that the sale was a loan or any type of
transaction other than a credit sale.
(d)
Except as specified in sections 125 and 130,
this title and the regulations issued thereunder do
not affect the validity or enforceability of any con­
tract or obligation under State or Federal law.
§ 112. Crimin.il liability for willful ami knowing
violation

Whoever willfully and knowingly
(1) gives false or inaccurate information or
fails to provide information which he is re­
quired to disclosc under the provisions of this
title or any regulation issued thereunder,
(2) uses any chart or table authorized by
the Board under section 107 in such a man­
ner as to consistently understate the annual
percentage rate determined under section 107
(a)(1)(A), or
(3) otherwise fails to comply with any re­
quirement imposed under this title,
shall be fined not more than $5,000 or imprisoned
not more than one year, or both.

CHAPTER 2— CRKDIT TRANSACTIONS
Sec.

121.
122.
123.
124.
125.
126.
127.
128.
129.
130.
131.

General requirement of disclosure.
_
Form of disclosure; additional information.
Exemption for State-regulated transactions.
Effect of subsequent occurrence.
Right of rescission as to certain transactions.
Content of periodic statements.
Open end consumer credit plans.
Sales not under open end credit plans.
Consumer loans not under open end credit plans.
Civil liability.
Written acknowledgment as proof of receipt.

§ 121. General requirement of disclosure

(a) Each creditor shall disclose clearly and con­
spicuously, in accordance with the regulations of
the Board, to each person to whom consumer credit
is extended and upon whom a finance charge is or
may be imposed, the information required under
this chapter.
(b) If there is more than one obligor, a creditor
need not furnish a statement of information re­
quired under this chapter to more than one of
them.
§ 122. Form of disclosure; additional information

(a) Regulations of the Board need not require
that disclosures pursuant to this chapter be made
in the order set forth in this chapter, and may per­
mit the use of terminology different from that em­
ployed in this chapter if it conveys substantially the
same meaning.
(b) Any creditor may supply additional informa­
tion or explanations with any disclosures required
under this chapter.

§ 113. Penalties inapplicable to governmental agen­
cies

N o civil or criminal penally provided under this
title for any violation thereof may be imposed
upon the United States or any agency thereof, or
upon any State or political subdivision thereof, or
any agency of any State or political subdivision.

§ 123. Exemption for Stale-regulated transactions

The Board shall by regulation exempt from the
requirements of this chapter any class of credit
transactions within any State if it determines that
under the law of that State that class of transac­
tions is subject to requirements substantially similar
to those imposed under this chapter, and that
there is adequate provision for enforcement.

§ 114. Reports by Board and Attorney General

N ot later than January 3 of each year after
1969, the Board and the Attorney General shall,
respectively, make reports to the Congress concern­
ing the administration of their functions under this
title, including such recommendations as the Board
and the Attorney General, respectively, deem neces­
sary or appropriate. In addition, each report of the
Board shall include its assessment of the extent to
which compliance with the requirements imposed
under this title is being achieved.

§ 124. Effect of subsequent occurrence

_

If information disclosed in accordance with this
chapter is subsequently rendered inaccurate as the
result of any act, occurrence, or agreement sub­
sequent to the delivery of the required disclosures,
the inaccuracy resulting therefrom does not con­
stitute a violation of this chapter.

[U .S.C ., title 15, sec. 1601-1613.]

26

STATUTORY APPENDIX

REGULATION Z

§ 125. Right of rescission as to certain transactions

(d) The Board may, if it finds that such action
is necessary in order to permit homeowners to meet
bona fide personal financial emergencies, prescribe
regulations authorizing the modification or waiver
of any rights Created under this section to the extent
and under the circumstances set forth in those reg­
ulations.
(e) This section does not apply to the creation
or retention of a first lien against a dwelling to fi­
nance the acquisition of that dwelling.

(a) Except as otherwise provided in this section,
in the case of any consumer credit transaction in
which a security interest is retained or acquired in
any real property which is used or is expected to be
used as the residence of the person to whom credit
is extended, the obligor shall have the right to re­
scind the transaction until midnight of the third
business day following the consummation of the
transaction or the delivery of the disclosures re­
quired under this section and all other material dis­
closures required under this chapter, whichever is
later, by notifying the creditor, in accordance with
regulations of the Board, of his intention to do so.
The creditor shall clearly and conspicuously dis­
close, in accordance with regulations of the Board,
to any obligor in a transaction subject to this sec­
tion the rights of the obligor under this section. The
creditor shall also provide, in accordance with reg­
ulations of the Board, an adequate opportunity to
the obligor to exercise his right lo rescind any trans­
action subject to this section.
(b) When an obligor exercises his right to rescind
under subsection (a), he is not liable for any finance
or other charge, and any security interest given by
the obligor becomes void upon such a rescission.
Within ten days after receipt of a notice of rescis­
sion, the creditor shall return to the obligor any
money or property given as earnest money, down­
payment, or otherwise, and shall take any action
necessary or appropriate to reflect the termination
of any security interest created under the transac­
tion. If the creditor has delivered any property to
the obligor, the obligor may retain possession of it.
Upon the performance of the creditor’s obligations
under this section, the obligor shall tender the prop­
erty to the creditor, except that if return of the
property in kind would be impracticable or inequi­
table, the obligor-shall tender its reasonable value.
Tender shall be made at the location of the prop­
erty or at the residence of the obligor, at the option
of the obligor. If the creditor does not take posses­
sion of the property within ten days after tender by
the obligor, ownership of the property vests in the
obligor without obligation on his part to pay for it.
(c) Notwithstanding any rule of evidence, written
acknowledgment of receipt of any disclosures re­
quired under this title by a person to whom a state­
ment is required to be given pursuant to this sec­
tion does no more than create a rebuttable pre­
sumption of delivery thereof.

§ 126. Content of periodic statements

If a creditor transmits periodic statements in con­
nection with any extension of consumer credit
other than under an open end consumer credit plan,
then each of those statements shall set forth each
of the following items:
(1) The annual percentage rate of the total
finance charge.
(2) The date by which, or the period (if
any) within which, payment must be made in
order to avoid additional finance charges or
other charges.
(3) Such of the items set forth in section
127(b) as the Board may by regulation require
as appropriate to the terms and conditions
under which the extension of credit in ques­
tion is m a d e ..
§ 127. Open end consumer credit plans

(a)
Before opening any account under an open
end consumer credit plan, the creditor shall disclose
to the person to whom credit is to be extended each
of the following items, to the extent applicable:
(1) The conditions under which a finance
charge may be imposed, including the time
period, if any, within which any credit ex­
tended may be repaid without incurring a fi­
nance charge.
(2) The method of determining the balance
upon which a finance charge will be imposed.
(3) The method of determining the amount
of the finance charge, including any minimum
or fixed amount imposed as a finance charge.
(4) Where one or more periodic rates may
be used to compute the finance charge, each
such rate, the range of balances to which it
is applicable, and the corresponding nominal
annual percentage rate determined by multi­
plying the periodic rate by the number of
periods in a year.

27

REGULATION Z

STATUTORY APPENDIX

(5) If the creditor so elects,
(A) the average effective annual per­
centage rate of return received from ac­
counts under the plan for a representa­
tive period of time; or
(B) whenever circumstances are such
that the computation of a rate under sub­
paragraph (A) would not be feasible or
practical, or would be misleading or
meaningless, a projected rate of return
to be received from accounts under the
plan.
The Board shall prescribe regulations, con­
sistent with commonly accepted standards for
accounting or statistical procedures, to carry
out the purposes of this paragraph.
(6) The conditions under which any other
charges may be imposed, and the method by
which they will be determined.
(7) The conditions under which the creditor
may retain or acquire any security interest in
any property to secure the payment of any
credit extended under the plan, and a descrip­
tion of the interest or interests which may be
so retained or acquired.
(b)
The creditor of any account under an open
end consumer credit plan shall transmit to the
obligor, for each billing cycle at the end of which
there is an outstanding balance in that account or
with respect to which a finance charge is imposed,
a statement setting forth each of the following items
to the extent applicable:
(1) The outstanding balancc in the account
at the beginning of the statement period.
(2) The amount and date of each extension
of credit during the period, and, if a purchase
was involved, a brief identification (unless pre­
viously furnished) of the goods or services
purchased.
(3) The total amount credited to the ac­
count during the period.
(4) The amount of any finance charge
added to the account during the period, item­
ized to show the amounts, if any, due to the
application of percentage rates and the
amount, if any, imposed as a minimum or
fixed charge.
(5) Where one or more periodic rates may
be used to compute the finance charge, each
such rate, the range of balances to which it is
applicable, and, unless the annual percentage

28

rate (determined under section 107(a)(2)) is
required to be disclosed pursuant to paragraph
(6), the corresponding nominal annual per­
centage rate determined by multiplying the
periodic rate by the number of periods in a
year.
(6) Where the total finance chargc exceeds
50 cents for a monthly or longer billing cycle,
or the pro rata part of 50 cents for a billing
cycle shorter than monthly, the total finance
charge expressed as an annual percentage rate
(determined under section 107(a)(2)), except
that if the finance charge is the sum of two
or more products of a rate times a portion of
the balance, the creditor may, in lieu of dis­
closing a single rate for the total charge, dis­
close cach such rate expressed as an annual
percentage rate, and the part of the balancc
to which it is applicable.
(7) At the election of the creditor, the aver­
age effective annual percentage rate of return
(or the projected rate) under the plan as pre­
scribed in subsection (a)(5).
(8) The balance on which the finance
charge was computed and a statement of how
the balance was determined. If the balance is
determined without first deducting all credits
during the period, that fact and the amount
of such payments shall also be disclosed.
(9) The outstanding balance in the.account
at the end of the period.
(10) The date by which, or the period (if
any) within which, payment must be made
to avoid additional finance charges.
(c)
In the case of any open end consumer credit
plan in existence on the effective date of this sub­
section, the items described in subsection (a), to
the extent applicable, shall be disclosed in a notice
mailed or delivered to the obligor not later than
thirty days after that date.
§ 128. Sales not under open end credit plans
(a)
In connection with each consumer credit sale
not under an open end credit plan, the creditor
shall disclose each of the following items which is
applicable:
(1) The cash price of the property or serv­
ice purchased.
(2) The sum of any amounts credited as
downpayment (including any trade-in).
(3) The difference between the amount re-

STATUTORY APPENDIX

REGULATION Z

ferrcd to in paragraph (1) and the amount
referred to in paragraph (2).
(4) All other charges, individually itemized,
which are included in the amount of the credit
extended but which are not part of the finance
charge.
(5) The total amount to be financed (the
sum of the amount described in paragraph (3)
plus the amount described in paragraph (4)).
(6) Except in the case of a sale of a dwell­
ing, the amount of the finance charge, which
may in whole or in part be designated as a
time-price differential or any similar term to
the extent applicable.
(7) The finance charge expressed as an an­
nual percentage rate except in the case of a
finance charge
(A) which does not exceed $5 and is
applicable to an amount financed not ex­
ceeding $75, or
(B) which does not exceed $7.50 and
is applicable to an amount financed ex­
ceeding $75.
A creditor' may not divide a consumer credit
sale into two or more sales to avoid the dis­
closure of an annual percentage rate pursuant
to this paragraph.
(8) The number, amount, and due dates
or periods of payments scheduled to repay
the indebtedness.
(9) The default, delinquency, or similar
charges payable in the event of late payments.
(10) A description of any security interest
held or to be retained or acquired by the
creditor in connection with the extension of
credit, and a clear identification of the prop­
erty to which the security interest relates.
(b) Except as otherwise provided in this chapter,
the disclosures required under subsection (a) shall
be made before the credit is extended, and may
be made by disclosing the information in the con­
tract or other evidence of indebtedness to be signed
by the purchaser.
(c) If a creditor receives a purchase order by
mail or telephone without personal solicitation, and
the cash price and the deferred payment price and
the terms of financing, including the annual per­
centage rate, are set forth in the creditor’s catalog
or other printed material distributed to the public,
then the disclosures required under subsection (a)

may be made at any time not later than the date
the first payment is due.
(d)
If a consumer credit sale is one of a series
of consumer credit sales transactions made pursu­
ant to an agreement providing for the addition of
the deferred payment price of that sale to an exist­
ing outstanding balance, and the person to whom
the credit is extended has approved in writing both
the annual percentage rate or rates and the method
of computing the finance charge or charges, and
the creditor retains no security interest in any prop­
erty as to which he has received payments aggre­
gating the amount of the sales price including any
finance charges attributable thereto, then the dis­
closure required under subsection (a) for the par­
ticular sale may be made at any time not later than
the date the first payment for that sale is due. For
the purposes of this subsection, in the case of items
purchased on different dates, the first purchased
shall be deemed first paid for, and in the case of
items purchased on the same date, the lowest
priced shall be deemed first paid for.
§ 129. Consumer loans not under open end credit
plans
(a)
Any creditor making a consumer loan or
otherwise extending consumer credit in a transac­
tion which is neither a consumer credit sale nor
under an open end consumer credit plan shall dis­
close each of the following items, to the extent
applicable:
(1) The amount of credit of which the
obligor will have the actual use, or which
is or will be paid to him or for his account
or to another person on his behalf.
(2) All charges, individually itemized, which
are included in the amount of credit extended
but which are not part of the finance charge.
(3) The total amount to be financed, (the
sum of the amounts referred to in paragraph
(1) plus the amounts referred to in paragraph
(2)).
(4) Except in the case of a loan secured by
a first lien on a dwelling and made to finance
the purchase of that dwelling, the amount
of the finance charge.
(5) The finance charge expressed as an
annual percentage rate except in the ease of a
finance charge
(A)
which does not exceed $5 and is
applicable to an extension of consumer

29

REGULATION Z

STATUTORY APPENDIX

credit not exceeding $75, o r
(B)
which does not exceed $7.50 and
is applicable to an extension of consumer
credit exceeding $75.
A creditor may not divide an extension of
credit into two or more transactions to avoid
the disclosure of an annual percentage rate
pursuant to this paragraph.
(6) The number, amount, and the due dates
or periods of payments scheduled to repay
the indebtedness.
(7) The default, delinquency, o r similar
charges payable in the event of late payments.
(8) A description of any security interest
held or to be retained or acquired by the
creditor in connection with the extension of
credit, and a clear identification of the prop­
erty to which the security interest relates.
(b) Except as otherwise provided in this chapter,
the disclosures required by subsection (a) shall be
m ade before the credit is extended, and may be
made by disclosing the information in the note or
other evidence of indebtedness to be signed by the
obligor.
(c) If a creditor receives a request for an exten­
sion of credit by mail or telephone without personal
solicitation and the terms of financing, including the
annual percentage rate for representative amounts
of credit, are set forth in the creditor’s printed
material distributed to the public, or in the contract
of loan or other printed material delivered to the
obligor, then the disclosures required under sub­
section (a) may be made at any time not later than
the date the first payment is due.
§ 130. Civil liability
(a) Except as otherwise provided in this section,
any creditor who fails in connection with any con­
sumer credit transaction to disclose to any person
any information required under this chapter to be
disclosed to that person is liable-to that person in
an amount equal to the sum of
(1) twice the am ount of the finance charge
in connection with the transaction, except that
the liability under this paragraph shall not be
less than $100 nor greater than $1,000; and
(2) in the case of any successful action to
cnforce the foregoing liability, the costs of the
action together with a reasonable attorney’s
fee as determined by the court.
(b) A creditor has no liability under this section

if within fifteen days after discovering an error,
and prior to the institution of an action under this
section or the receipt of written notice of the error,
the creditor notifies the person concerned of the
error and makes whatever adjustments in the ap­
propriate account are necessary to insure that the
person will not be required to pay a finance charge
in excess of the amount or percentage rate actually
disclosed.
(c) A creditor may not be held liable in any
action brought under this section for a violation of
this chapter if the creditor shows by a preponder­
ance of evidence that the violation was not inten­
tional and resulted from a bona fide error notwith­
standing the maintenance of procedures reasonably
adapted to avoid any such error.
(d) Any action which may be brought under this
section against the original creditor in any credit
transaction involving a security interest in real
property may be maintained against any subsequent
assignee of the original creditor where the assignee,
its subsidiaries, or affiliates were in a continuing
business relationship with the original creditor
either at the time the credit was extended o r at the
time of the assignment, unless the assignment was
involuntary, or the assignee shows by a preponder­
ance of evidence that it did not have reasonable
grounds to believe that the original creditor was
engaged in violations of this chapter, and that it
maintained procedures reasonably adapted to ap­
prise it of the existence of any such violations.
(e) Any action under this section may be brought
in any United States district court, or in any other
court of competent jurisdiction, within one year
from the date of the occurrence of the violation.
§ 131. W ritten acknowledgment as proof of receipt
Except as provided in section 125(c) and except
in the case of actions brought under section 130(d),
in any action or proceeding by or against any sub­
sequent assignee of the original creditor without
knowledge to the contrary by the assignee when he
acquires the obligation, written acknowledgment of
receipt by a person to whom a statement is required
to be given pursuant to this title shall be conclusive
proof of the delivery thereof and, unless the viola­
tion is apparent on the face of the statement, of
compliance with this chapter. This section does not
affect the rights of the obligor in any action against
the original creditor.
[U.S.C., tile 15, see. 1631-1641.)

30

STATUTORY APPENDIX

REGULATION Z

CHAPTER 3—CREDIT ADVERTISING

(5)
Such other o r additional information for
the advertising of open end credit plans as the
Board may by regulation require to provide
for adequate comparison of credit costs as
between different types of open end credit
plans.

Sec.
141. Catalogs and multiple-page advertisements.
142. Advertising of downpayments and installments.
143. Advertising of open end credit plans.
144. Advertising of credit other than open end plans.
145. Nonliability of media.

§ 144. Advertising of credit other than open end
plans
(a) Except as provided in subsection (b), this
section applies to any advertisement to aid, pro­
mote, or assist directly or indirectly any consumer
credit sale, loan, or other extension of crcdit subject
to the provisions of this title; other than an open
end credit plan.
(b) The provisions of this section do not apply to
advertisements of residential real estate except to
the extent that the Board may by regulation re­
quire.
(c) If any advertisement to which this section
applies states the rate of a finance charge, the ad­
vertisement shall state the rate of that charge ex­
pressed as an annual percentage rate.
(d) If any advertisement to which this section
applies states the amount of the downpayment, if
any, the amount of any installment payment, the
dollar amount of any finance chargc, or the num­
ber of installments or the period of repayment, then
the advertisement shall state all of the following
items:
(1) The cash price or the amount of the
loan as applicable.
(2) The downpayment, if any.
(3) The number, amount, and due dates or
period of payments scheduled to repay the
indebtedness if the credit is extended.
(4) The rate of the finance charge expressed
as an annual percentage rate.

§ 141. Catalogs and multiple-page advertisements
F o r the purposes of this chapter, a catalog or
Other multiple-page' advertisement shall be considerd.a single advertisement if it clearly and con­
spicuously displays a credit terms table on which
the information required to be stated under this
chapter is clearly set forth.
§ 142. Advertising of downpayments and install­
ments
N o advertisement to aid, promote, or assist
directly or indirectly any extension of consumer
crcdit may state
(1) that a specific periodic consumer credit
amount or installment amount can be ar­
ranged, unless the creditor usually and cus­
tomarily arranges credit payments or install­
ments for that period and in that amount.
(2) that a specified downpayment is re­
quired in connection with any extension of
consumer credit, unless the creditor usually
and customarily arranges downpayments in
th at amount.
§ 143. Advertising of open end credit plans
N o advertisement to aid, promote, or assist di­
rectly or indirectly the extension of consumer credit
under an open end credit plan may set forth any of
the specific terms of that plan or the appropriate
rate determined under section 127(a)(5) unless it
also clearly and conspicuously sets forth all of the
following items:
(1) The time period, if any, within which
any credit extended may be repaid without in­
curring a finance charge.
(2) The method of determining the balancc
upon which a finance charge will be imposed.
(3) The method of determining the amount
of the finance charge, including any minimum
or fixed amount imposed as a finance charge.
(4) Where periodic rates may be used to
compute the finance charge, the periodic rates
expressed as annual percentage rates.

§ 145. Nonliability of media
There is no liability under this chapter on the
part of any owner or personnel, as such, of any
medium in which an advertisement appears o r
through which it is disseminated.
IU.S.C., title 15, see. 1661-1665.J
$

31

>
S

REGULATION Z

TITLE V— G EN ERA L PROVISIONS

Sec.
501.
502.
503.
504.

Severability.
Captions and catchlines for reference only.
Grammatical usages.
Effective dates.

§ 501. Severability
I f a provision enacted by this Act is held in­
valid, all valid provisions that are severable from
the invalid provision remain in effect. If a provi­
sion enacted by this A ct is held invalid in one* or
more of its applications, the provision remains in
effect in all valid applications that are severable
from the invalid application or applications.
§ 502. Captions and catchlines for reference only
Captions and catchlines are intended solely as

STATUTORY APPENDIX

aids to convenient reference, and no inference as
to the legislative intent with respect to any provi­
sion enacted by this Act may be drawn from them.
§ 503. Grammatical usages
In this Act:
(1) The word “may” is used to indicate that
an action either is authorized or is permitted.
(2) The word “shall” is used to indicate that
an action is both authorized and required.
(3) The phrase “may not” is used to indi­
cate that an action is both unauthorized and
forbidden.
(4) Rules of law are stated in the indicative
mood.
§ 504. Effective dates
(a) Except as otherwise specified, the provisions
of this Act take effect upon enactment.
(b) Chapters 2 and 3 of title I take effect on
July 1, 1969.
(c) Title III takes effect on July 1,1970.
[U.S.C., title 15, sec. 1601 note.]

32

REGULATION

z
Some questions and answers
about the advertising of credit
Q: Does Regulation Z affect credit advertising?
A: Yes it does. It affects all advertising to aid or promote any extension of
consumer credit regardless of who the advertiser may be. An association,
for example, which advertises that its members extend consumer credit
is subject to the advertising provisions of Regulation Z.
Q: What kinds of advertising are affected?
A: All types of advertising: television, radio, newspapers, magazines,
leaflets, flyers, catalogs, public address announcements, direct mail
literature, window displays, billboards, etc. (Reg. Z/226.2 (b))
Q: How does Regulation Z affect your advertising as a creditor?
A: Generally, you may not advertise that the down payment, installment
plan or amount of credit can be arranged unless you usually arrange
terms of this type. (Reg. Z/226.10 (a ))
Q: How else is credit advertising affected?
A: If it is open end credit see Reg. Z/226.10 (c). For credit other than open
end see Reg. Z/226.10 (d). If you advertise in catalogs, see
Reg. Z/226.10 (b). But generally you are not permitted to advertise
any specific credit term unless all other terms involved are stated clearly
and can be easily seen.
T y p ic a l fo rm a ts o f disclosures u n d e r R e g u la tio n Z are sh ow n on the fo llo w in g
pages f o r d e m o n s tra tio n o n ly . T h e y are n o t inte n d e d f o r the re q u ire m e n ts o f y o u r
business. F o r f u l l in fo r m a tio n , please re fe r to the p ro v is io n s o f the R e g u la tio n .

17

EXHIBIT A
Example of a retailer’s statement, prepared by a manual billing operation, for an account on which the
finance charge is determined by a single periodic rate or a minimum charge of 50 cents applicable to balances
under a specific amount. It also assumes that the finance charge is computed on the previous balance before
deducting payments and/or credits. Separate slips shall accompany each statement, identifying all charges
and credits and showing the dates and amounts thereof.

Any Store U. S. A.
MAIN S T R E E T -A N Y CITY, U.S.A.

(Customer's name here)

AMT. PAID.
TO I N S U R E P R O P E R C R E D I T RE T UR N T H I S P OR T IO N W ITH YOUR PAYMENT

PREVIOUS
BALANCE

FINANCE
CHARGE
50 CENT
M IN IM UM .

PAYMENTS

CREDITS

PURCHASES

NEW
BALANCE

M IN IM U M
PAYMENT

FINANCE CHARGE IS COMPUTED BY
A “ PERIODIC RATE" OF
% PER
MONTH (OR A M IN IM U M CHARGE OF
5 0 CENTS FOR BALANCES UNDER
$
) W HICH IS AN ANNUAL
PERCENTAGE RATE OF
% AP­
PLIED TO THE PREVIOUS BALANCE
W IT H O U T D E D U C T IN G C U R R E N T
PAYMENTS A N D /O R CREDITS APPEAR­
ING ON TH IS STATEMENT.

N TIC
O E
PLEASE SEE ACCOMPANYING STATE­
M E N T ® FOR IMPORTANT INFORMA­
T IO N .
PAYM ENT S, CR E D I T S O R CH A RG ES , RECEIVED AFT ER T H E DATE S H O W N
ABOV E T H E ARROW, W H I C H IS T H E CL O S I N G DATE O F T H I S BILL ING CYCLE.
WIL L A PP E A R ON YOUR NEXT STA TEMENT. T O AVOID ADD ITIO NAL FI NANCE
C H A R G E S PAY T H E “ NEW BA LA NC E" B E F O R E T H I S DATE NEXT M ONT H.
ANY STO RE , U.S.A.

fr

MAIN STRE ET , ANY CITY, U.S.A.

This form, when properly completed, will show how a creditor may comply with the disclosure requirements
of the provisions of paragraphs (b) and (c) of §226.7 of Regulation Z for the type of credit extended in this
example. This form is intended solely for purposes of demonstration and it is not the only format which will
permit a creditor to comply with disclosure requirements of Regulation Z.

18

ILLUSTRATION OF FEDERAL DISCLOSURES ON A PERIODIC STATEMENT
FOR A RETAIL OPEN END CREDIT ACCOUNT
(Section 226.7)
Regulation Z
Applicable Disclosures Shown on Exhibit A (opposite page)
Reference (226.7)
1. “Previous Balance” ......................................... »....................... (b) (1) & (c) (1)
2. Purchases . . . . ................................................*......................... (b) (2) & (c) (1)
3. “Payments” ................................................................................(b) (3) & (c) (1)
4. “Credits” ....................................................................................(b) (3) & (c) (1)
5. “Finance Charge” (showing minimum charge)........................(b) (4) & (c) (1)
6. “Periodic Rate” (showing balance to which applicable)...........(b) (5) & (c) (2)
7. “Annual Percentage Rate” ........................................................(b) (6) & (c) (1)
8. Balance on which Finance Charge Was Computed
(with explanation of how balance was determined)...........(b) (8) & (c) (2)
9. Closing Date of the Billing C ycle............... ............................. (b) (9) & (c) (1)
10. Balance at Closing Date, “New Balance” ................................ (b) (9) & (c) (1)
11. Date or Period for Payment to Avoid Additional
Finance Charges ...................................................................(b) (9) & (c) (1)
Other Disclosures Applicable to Example but not Illustrated on Exhibit A

(These disclosures would be made on separate slips which would
accompany statement but which are not illustrated here.)
1. Date of Each Purchase...............................................................(b) (2) & (c) (1)
2. Brief Identification of Each Purchase...................................... (b )(2)& Footnote 7
3. Brief Identification of Credits Other Than Payments................(b) (3) & Footnote 8
Other Disclosures Not Applicable to Example Illustrated on Exhibit A

Regulation Z prescribes other disclosures to be made on open end credit account
periodic statements which are not applicable to the illustrated example, such as, where
there is more than one periodic rate (b)(5), more than one annual percentage rate (b)(6),
charges for insurance 226.4 (a)(5) and (6), etc.

19

E X H IB IT S

Example o f a retailer’s descriptive statement, prepared by an automated billing operation, for an account on
which the finance charge is determined by a single periodic rate or a minimum charge of 50 cents applicable
to balances under a specified amount. It also assumes that the finance charge is computed on the previous
balance before deducting payments and/or credits.
(FACE OF FORM)

Any Store U. S. A.
M A IN S T R E E T - A N Y C IT Y , U .S .A .

(Customer's name here)

YOUR ACCOUNT NUMBER I S _
TO INSURE PROPER CR EDIT RETURN TH IS PORTION W IT H PAYM ENT
BILLIM G DATES
NEXT MO.

TRANSACTION NO.

We Added Your

To Your

DATE

FINANCE CHARGE

PREVIOUS BALANCE

TH IS MO.

50« M IN IM U M

STORE

DEPT. NO.

.To Avoid Additional Finance Charges, Pay The “ New
B alance” Before Your B illin g Date N ext Month. | |

We Deduc t e d Y o u r
PAYMENTS

CREDITS

DEPARTMENT NAME

CHARGES

This Is Your

This Is Your

NEW BALANCE

M INIMUM PAYMENT

We Added Your
PURCHASES

PAYMENTS &
CREDITS

ANNUAL
PERCENTAGE
RATE
%

N O T IC E : SEE R E V E R S E S I D E F O R I M P O R T A N T I N F O R M A T I O N

(REVERSE SIDE OF FORM)
P A Y M E N T S , C R E D IT S O R C H A R G E S R E C E IV E D A F T E R Y O U R B I L L I N G D A T E " T H I S M O N T H ” W I L L A P P E A R O N Y O U R
N E X T S T A T E M E N T . Y O U R FINA N CE CHARGE IS C O M P U T E D BY A S I N G L E P E R I O D IC R A TE O F
% (O R A M I N I M U M
C H A R G E O F 5 0 C E N T S FO R B A L A N C E S U N D E R $
) W H I C H IS A N A N N U A L PERCENTAGE RATE O F
% A P P LIE D
T O Y O U R " P R E V IO U S B A L A N C E " W I T H O U T D E D U C T I N G C U R R E N T P A Y M E N T S A N D / O R C R E D IT S A P P E A R I N G O N T H E
FA CE O F T H I S S T A T E M E N T .

DEPT. NO.

DEPT. NAME

DEPT. NO.

DEPT. NAME

DEPT. NO.

DEPT. NAME

M E N ’S ACCESSORIES
( S h ir ts , T ie s, S o c k s , e t c . )

M EN’S CLOTHING

(In t h is fo rm of b illin g , t h is side o f th e s t a t e m e n t c o n ta i n s a l is t in g of
all d e p a r t m e n t s a n d a b rie f d e s c rip t io n o f t h e m e r c h a n d is e sold in e a c h .)

( S u its , S p o r t c o a t s ,
O u t e r w e a r , e tc .)

This form, when properly completed, will show how a creditor may comply with the disclosure requirements
o f the provisions of paragraphs (b) and (c) of §226.7 of Regulation Z for the type of credit extended in this
example. This form is intended solely for purposes of demonstration and it is not the only format which will
permit a creditor to comply with disclosure requirements of Regulation Z .

ANOTHER ILLUSTRATION OF FEDERAL DISCLOSURES ON A PERIODIC
STATEMENT FOR A RETAIL OPEN END CREDIT ACCOUNT
(Section 226.7)
Regulation Z

Applicable Disclosures Shown on Exhibit B (opposite page)

Reference <226.7)

1. “Previous Balance” .....................................................................(b) (1) & (c) (1)
2. Purchases..................................................................................... (b) (2) & (c) (1)
3. “Payments” ................................................................................. (b) (3) & (c) (1)
4. “Credits” ..................................................................................... (b) (3) & (c) (1)
5. “Finance Charge” (showing minimum charge).......................... (b) (4) & (c) (1)
6. “Annual Percentage Rate” ..........................................................(b) (6) & (c) (1)
7. Balance on Which Finance Charge was Computed....................(b) (8) & (c) (2)
8. Closing Date of the Billing C y c le ............................................... (b) (9) & (c) (1)
9. Balance at Closing Date, “New Balance” .................................. (b) (9) & (c) (1)
10. Date or Period for Payment to Avoid Additional
Finance Charge...................................................................... (b) (9) & (c) (1)
11. Date of Each Purchase................................................................ (b) (2) & (c) (1)
12. Brief Identification of Each Purchase by Symbol Relating to
an Identification List Printed on the Reverse Side............... (b) (2) & Footnote 7
13. Brief Identification of Credits Other Than Payments by Symbol
Relating to an Identification List Printed on the
Reverse Side ........................................................................ (b) (3) & Footnote 8

Other Disclosures Applicable to Example Which Appear on Reverse Side of Exhibit B
1.
2.
3.
4.

“Periodic Rate” (showing balance to which applicable)............. (b) (5) & (c) (2)
“Annual Percentage Rate” ..........................................................(b) (6) & (c) (2)
Reference to the Finance Charge (showing minimum charge). (b) (4) & (c) (2)
Reference to the Balance on Which Finance Charge
was Computed (with explanation of how balance
was determined).................................. ....................................(b) (8) & (c) (2)
5. Identification List to Identify Transactions.............................. (b) (2) and (3)

Other Disclosures Not Applicable to Example Illustrated on Exhibit B
Regulation Z prescribes other disclosures to be made on open end credit account
periodic statements which are not applicable to the illustrated example, such as, where
there is more than one periodic rate (b) (5), more than one annual percentage rate
(b)
(6), charges for insurance 226.4 (a) (5) and (6), etc.

21

E X H IB IT C

S e l l e r ' s N a m e_ :_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _o_n t r a c t # .
C

R E T A IL IN S T A L L M E N T C O N T R A C T A N D S E C U R IT Y A G R E E M E N T
Th e undersigned (herein c a lle d Purchaser, w h e th e r one or
more) purchases f r o m - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (seller)
an d grants to - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - a security in terest in, subject to th e term s and conditions
hereof, the fo llo w in g described property.

PURCHASER’S NAME__
PURCHASER’S ADDRESS.

C Y
IT __________________ ST T ________ Z
AE
IP.
1. CASH PRICE

QUANTITY

DESCRIPTION

AMOUNT

$

2. LESS: CASH DOWN PAYMFNT $
3.
4.

TRADE-IN

.... ..

T0TA1. DOWN PAYMENT

5 . UNPAID BALANCE OF CASH PRICE

.

. . . . . .J$ . . .
...

..

-

?

6 . OTHER CHARGES;
s

7. AMOUNT FINANCED
8. FINANCE CHARGE

$

9, TOTAL OF PAYMENTS

Description o f Trade-in:

*

$

10. DEFERRED PAYMENT PRICE ( 1 + 5 + 8 ) ?
Sales Tax

11. ANNUAL PERCENTAGE RATE

-

Total

_ _

...... %

P u rc h a s e r h e re b y a g re e s to p a y t o . . .

a t th p ir
o ffic e s s h o w n a b o v e th e “ T O T A L O F P A Y M E N T S ”
T h e p u r c h a s e o fi n s u r a n c e c o v e r a g e i s v o l u n t a r y
s h o w n a b o v e I _ _ _ _ _ _ _ _m o n t h l y i n s t a l l m e n t s o f
n
a n d n o t re q u ire d fo r c r e d it.
(T y p e o f
In s .)
$ _ _ _ _ _ _ _ _ _ _ ( f i n a l p a y m e n t t o b e_ _ _ _ _ _ _ _ _ _ )
$
i n s u r a n c e c o v e r a g e is a v a i l a b l e a t a c o s t o f
- t h e f i r s t i n s t a l l m e n t b e i n g p a y a- b- l- e- - - - - - - - - - - - - - - $ _ _ _ _ _ _ _ _ _ _ _ _ _f o r t h e t e r m o f c r e d i t .
1 9_ _ _ _ _ , a n d a ll s u b s e q u e n t in s t a l lm e n t s o n t h e
I d e s ire in s u r a n c e c o v e r a g e
s a m e d a y o f e a c h c o n s e c u t i v e m o n t h u n t i l p a i d in
fu ll. T h e f in a n c e c h a r g e a p p lie s f r o m
(D a te )
S i g n e d - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - D- a-t-e - - - - - - In s u r a n c e A g r e e m e n t

I d o n o t d e s ir e in s u r a n c e c o v e ra g e
S i g n e _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ D a t_e_ _ _ _ _ _
!
_

S ig n e d .

N o t i c e t o B u y e r : Y o u a r e e n t itle d t o a c o p y o f t h e c o n t r a c t y o u sign. Y o u h a v e t h e r ig h t t o p a y in a d v a n c e t h e u n p a id
b a l a n c e o f t h i s c o n t r a c t a n d o b t a in a p a r t ia l re fu n d o f t h e f in a n c e c h a r g e b a s e d on t h e " A c t u a r ia l M e t h o d . " [A n y o t h e r
m e t h o d o f c o m p u t a t i o n m a y be so i d e n t if i e d , f o r e x a m p l e , " R u le o f 7 8 ' s , ” " S u m o f t h e D i g i ts , ” e tc .]

This form, when properly completed, will show how a creditor may comply with the disclosure requirements
of the provisions o f paragraphs (b) sind (c ) of §226.7 of Regulation Z for the type of credit extended in this
example. This form is intended solely for purposes of demonstration and it is not the only format which will
permit a creditor to comply with disclosure requirements of Regulation Z ,
22

ILLUSTRATIO NS OF FED ER AL DISCLOSURES
O N A R E T A IL IN S TA LLM E N T CO NTRACT
(Section 226.8)
Applicable Disclosures Shown on Exhibit C (opposi te page)

Regulation Z
Reference (226.8)

1. “CashPrice” ............................................................................................... (c)(1)
2. “Cash Downpayment” .............................................................................. (c) (2)
3. “Trade-In” ............... ■................................................................................. (c)(2)
4. “Total Downpayment” ...............................................................................(c) (2)
5. “Unpaid Balance of Cash Price” ................................................................(c)(3)
6. Other Charges Individually Itemized (not finance charges)..................... (c) (4)
7. “Amount Financed” ...................................................................................(c)(7)
8. “Finance Charge” .......................................................................................(c )(8 )(i)
9. “Deferred Payment Price” .......................................................................... (c) (8) (ii)
10. Date Finance Charge Begins to Accrue..................................................... (b)(1)
11. “Annual Percentage Rate” ........................................................................ (b) (2)
12. Number, Amount, and Due Dates of Payments.........................................(b) (3)
13. “Total of Payments” ...................................................................................(b )(3)
14. Identification of Security In terest..............................................................(b) (5)
15. Identification of Property to Which Security Interest Relates................... (b) (5)
16. Method of Computing Any Unearned Portion of the Finance Charge . . . .(b )(7 )
(a)
17. Identification of C re d ito r....................................................................
18. Charges for Credit Life, Accident, Health or Loss of
Income Insurance ........................................................................ 226.4(a)(5)
Other Disclosures Not Applicable to Example Illustrated on Exhibit C
Regulation Z prescribes other disclosures to be made in connection with credit sales
depending on the terms of the transaction and type of security interest taken by the
creditor. For example:
§226.8
“Prepaid Finance Charge” .................................................................................(c) (6)
“Required Deposit Balance” .............................................................................. (c)(6)
“BalloonPayment” ....................................................................................... .(b )(3 )
Default, Delinquency or Similar Charges........................................................... (b) (4)
After Acquired Property .....................................................................................(b )(5)
Security for Future Indebtedness........................................................................(b) (5)
Penalty Charge................................................................................................... (b )(6)
Unearned Finance C h arg e................................................................................ (b) (7)
Property Insurance ................................................................................ 226.4(a) (6)
Real Property Security............................................................................ 226.9

23

E X H IB IT D

Example o f disclosures on a promissory note for non-sale credit for which a finance charge is added to the
amount financed and the obligation is repayable in installments.

PROMISSORY NOTE

( C ity )

( S t a te )

___________ 19____
For value received, undersigned maker(s), jointly and severally, promise to
pay to the order o f____________________________________ at the above place
_______________________________ dollars ($______ ) in______ consecutive
monthly payments of $_________ , each beginning one month from the date
hereof and thereafter on the same date of each subsequent month until paid
in full. Any unpaid balance may be paid, at any time, without penalty and any
unearned finance charge will be refunded based on the "Rule of 78’s". In the
event that maker(s) default(s) on any payment, a charge o f _________ may
be assessed.
1. Proceeds

$ _______________

2 . ___________________
( O t h e r c h arg es , it e m iz e d )

3. Amount financed ( 1 + 2 )

$---------------------------

4. FINANCE CHARGE
5. Total of payments

$ _______________

ANNUAL PERCENTAGE RATE

%

Signed

This form, when properly completed, will show how a creditor may comply with the disclosure requirements
of the provisions of paragraphs (b) and (d) of §226.8 of Regulation Z for the type of credit extended in this
example. This form is intended solely for purposes o f demonstration and it is not the only format which will
permit a creditor to comply with disclosure requirements of Regulation Z.

24

IL LU S TR A TIO N OF FEDERAL DISCLOSURES ON A PROMISSORY
N O TE FOR A LO A N
(Section 226.8)
Regulation Z
Applicable Disclosures Shown on Exhibit D (opposite page)
Reference (226.8)
1. “Amount Financed” ....................................................................................... (d) (1)
2. Other Charges Individually Itemized (not finance charges).............................. (d) (1)
3. “Finance Charge” ............................................................................ ................ (d ) (3)
4. “Annual Percentage Rate” ................. .............................................................(b )(2 )
5. Number, Amount, Due Dates of Payments ......................... . . • • .......... . . . . . ( b ) (3)
6. “Total of Payments” ................................ ........................................................ (b)(3)
7. Charges for Default or Late Payment................................................................(b) (4)
8. Method of Computing Any Unearned Finance Charge.....................................(b) (7)
9. Identification of Creditor................................................................................... (a)

Other Disclosures Not Applicable to Example Shown in Exhibit D
See comment under similar heading on Page 23.

25

E X H IB IT £

DISCLOSURE

STATEMENT

BORROWERS (NAMES AND ADDRESSES):

OF

LOAN

LENDER:

LOAN _ Date.
_ _ _ _ _ _ _ _ _NO_

(S T R E E T A D D R E S S )

( C IT Y )
TOTAL OF PAYMENTS
$

F I N A N C E C H AR G E
$

PA YA BLE IN :
C O N S E C U T IV E
MONTHLY
IN S T A LLM E N TS

AMOUNT FINANCED

(S T A T E )

ANNUAL PERCENTAGE
RATE:
%

$
D U E DATE OF PA YM EN TS

F IR S T :

OTHERS:
S A M E DAY O F
EACH M O N T H

(Z IP )

DISABILITY
INSURANCE
CHARGE
$

CREDIT LIFE
INSURANCE
CHARGE
$

PROPERTY
INSURANCE
CHARGE
$

A M O UNT OF PAYMENTS
F IR S T:

O THERS:

$

F IN A L :

$

FIN A L:
$

R E C O R D IN G FEE
$

INSURANCE
P R O P E R T Y I N S U R A N C E , i f w r i t t e n in c o n n e c t i o n w i t h t h i s l o a n , m a y b e o b t a i n e d u y b o r r o w e r
t h r o u g h a n y p e rs o n o f h is c h o ic e . I f b o r r o w e r d e s ir e s p r o p e r ty in s u r a n c e t o b e o b ta in e d
__
t h r o u g h t h e c r e d i t o r , t h e c o s t w i l l b e _$_ _ _ _ _ _ _ _ _ _f o r t h e t e r m o f t h e c r e d i t .
C R E D I T L I F E A N D D I S A B I L I T Y I N S U R A N C E is n o t r e q u i r e d t o o b t a i n t h i s l o a n . N o c h a r g e is
m a d e f o r c r e d it in s u r a n c e a n d n o c r e d it in s u r a n c e is p r o v id e d u n le s s t h e b o r r o w e r s ig n s t h e
a p p r o p r ia t e s t a t e m e n t b e lo w :
( a ) T h e c o s t f o r C r e d i t L i f e I n s u r a n c e a l o n e w i l_ _ _ _ _ _ _ _ _ _ _ _ _f o r t h e t e r m o f
l be $
th e c r e d it.
( b ) T h e c o s t f o r C r e d i t L i f e a n d D i s a b i l i t y I n s u r a n c e w _l _ _ b e _ $ _ _ _ _ _ _f o r t h e
i l __ _
te r m o f th e c re d it.
I d e s ir e C re d it L ife
a n d D is a b ility In s u r a n c e .
(D a te )

(S igna ture)

I d e s ir e C r e d it
L ife In s u r a n c e o n ly .
(D ate )

(S ignature)

(D ate)

I D O N O T w a n t C re d
L ife o r D is a b ility In s u r a n c e .
( S ig n a t u r e )

R E B A T E F O R P R E P A Y M E N T I N F U L L . I f t h e l o a n c o n t r a c t is p r e p a i d in f u l l b y c a s h , a n e w
lo a n , r e fin a n c in g o r o t h e r w is e b e fo r e t h e fin a l i n s t a l lm e n t d a te , t h e b o r r o w e r s h a ll r e c e iv e a
r e b a t e o f p r e c o m p u t e d in t e r e s t c o m p u te d u n d e r t h e R u le o f 7 8 's .
D E F A U L T C H A R G E . [ T h e c r e d ito r s h o u ld s e t fo r t h t h e a m o u n t , o r m e t h o d o f c o m p u t i n g t h e
a m o u n t , o f a n y d e f a u l t , d e l i n q u e n c y , o r s i m i l a r c h a r g e s p a y a b l e in t h e e v e n t o f l a t e p a y m e n t s . ]

SECURITY
D E S C R IP T IO N
□

M o t o r V e h ic le ( s ) : M a k e - ............................... S e ria l N o : ....................................

□

H o u s e h o ld G oods & A p p lia n c e s o f t h e fo llo w in g d e s c r ip t io n :............

....................................
....................................
....................................
□

O th e r: (D e s c rib e ) .......................................................................................................

B. p T h i s L o a n is U n s e c u re d .
1 A C K N O W L E D G E R E C E IP T O F A C O P Y O F T H I S S T A T E M E N T .
B o rro w e r: ........................................................................................................

This itn e s s : when properly completed, will show how a creditor may comply with the disclosure requirements
W form, .........................................................................................................
of the provisions of paragraphs (b) and (c) of §226.7 of Regulation Z for the type of credit extended in this
example. This form is intended solely for purposes of demonstration and it is not the only format which will
permit a creditor to comply with disclosure requirements of Regulation Z .

26

ILLUSTRATION OF FEDERAL DISCLOSURES ON A SEPARATE
STATEMENT FOR A LOAN REPAYABLE IN INSTALLMENTS
(Section 226.8)

Applicable Disclosures Shown on Exhibit E (opposite page)

Regulation Z
Reference (226.8)

1. Identification of Transaction.......................................................................... (a)
2. “Amount Financed” including itemized charges other than finance
charges. (Note §226.4(b)).......................................................................... (d)(1)
3. “Finance Charge” ...........................................................................................(d) (3)
4. “Annual Percentage Rate” ...............................................................................(b) (2)
5. Number, Amount, and Due Date of Payments............................................... (b) (3)
6. “Total of Payments” ........................................................................ .............. (b) (3)
7. Default, Delinquency, or Similar Charge....................................................... (b) (4)
8. Identification of Security Interest.................................................................... (b) (5)
9. Identification of Property to Which Security Interest Relates..........................(b) (5)
10. Method of Computing Any Unearned Portion of the Finance Charge...........(b) (7)
11. After-acquired Property Subject to Security Interest...................................... (b) (5)
12. Security for Future Indebtedness.................................................................... (b) (5)
13. Identification of Creditor.................................................................................(a)
14. Credit Life, Accident, and Health Insurance...................................... §226.4 (a) (5)
15. Property and Liability Insurance......................................................... §226.4 (a) (6)

Other Disclosures Not Applicable to Example Shown in Exhibit E
Regulation Z prescribes other disclosures to be made in connection with loan credit
which are not applicable to the illustrated example, such as, prepaid finance
charge (c)(6), required deposit balance (c)(6), and balloon payment (b)(3), etc.

27

E X H IB IT F

NOTICE OF RIGHT OF RESCISSION
The following form is the form of notice of the right to rescind a transaction required to be given to customers
under certain circumstances set forth in Section 226.9 of Regulation Z. This exhibit is set in capitals and
lower case letters of 12 point bold faced type, the minimum size permissible under Regulation Z.

(Id e n tific atio n of T ra n sactio n )

Notice To Customer Required By Federal Law:
You have entered into a transaction o n -------------------------------which may
(D ate)

result in a lien, mortgage, or other security interest on your home. You have a
legal right under federal law to cancel this transaction, if you desire to do so,
without any penalty or obligation within three business days from the above
date or any later date on which all material disclosures required under the
Truth in Lending Act have been given to you. If you so cancel the transaction,
any lien, mortgage, or other security interest on your home arising from this
transaction is automatically void. You are also entitled to receive a refund of
any downpayment or other consideration if you cancel. If you decide to cancel
this transaction, you may do so by notifying

( N a m e of C r e d ito r )

at______________________________________________________________
(A d d res s of C r e d it o r ’s P lace o f Busin ess)

by mail or telegram sent not later than midnight o f_________________ You
(D a te )

may also use any other form of written notice identifying the transaction if it is
delivered to the above address not later than that time. This notice may be
used for that purpose by dating and signing below.
I hereby cancel this transaction.

(D ate)

( C u s t o m e r 's s ig n a t u r e )

28

E X H IB IT F

The following paragraph may appear on the face or the reverse side of the notice shown on the opposite page.
If it appears on the reverse side of the notice, the face of the notice shall state, “See reverse side for important
information about your right of rescission.”

EFFECT OF RESCISSION. When a customer exercises his right to rescind under
paragraph (a) of this section, he is not liable for any finance or other charge, and
any security interest becomes void upon such a rescission. Within 10 days after
receipt of a notice of rescission, the creditor shall return to the customer any
money or property given as earnest money, downpayment, or otherwise, and shall
take any action necessary or appropriate to reflect the termination of any security
interest created under the transaction. If the creditor has delivered any property
to the customer, the customer may retain possession of it. Upon the performance
of the creditor’s obligations under this section, the customer shall tender the
property to the creditor, except that if return of the property in kind would be
impracticable or inequitable, the customer shall tender its reasonable value.
Tender shall be made at the location of the property or at the residence of the
customer, at the option of the customer. If the creditor does not take possession
of the property within 10 days after tender by the customer, ownership of the
property vests in the customer without obligation on his part to pay for it.

29

E X H IB IT G

SAMPLE PA G E FROM TABLE FO R COM PUTING A N N U A L PER C EN TA G E RATE
FO R LEVEL M O NTHLY PA Y M EN T PLANS
EXAMPLE
Finance chargc =» $35.00; Total amount financed — $200; Number of monthly payments =* 24,
SOLUTION
Step 1—
Divide tlie finance charge by the total amount financed and multiply by $100. This gives the
finance charge per $100 of amount financed. That is, $35.00 -f- $200 = .1750 x $100 = $17.50.
Step 2 —
Follow down the left hand column of the table to the line for 2 4 months. Follow across this
line until you find the nearest number to $17.50. In this example $17.51 is closest to $17.50.
Reading up the column of figures shows an annual percentage rale of 16%.
A N N U A L P E R C E N T A G E RATE

14.00*

14.251

14.50*

1 4 . 7 5 * 1 5 . 0 0 * 1 5 . 2 5 * 1 5 . 5 0 * 15 . 7 5*
(FINAN CE

C HA RG E

PER *100

. 00 * ) l o . 2 5 * 1 6 . 5 a *
UF AMO UN T

16.75* 17.00*

17.25* 17.50*

1
2
3
4
5

1
1
2
2
3

17
75
34
93
53

1.
1.
2.
2.
3.

19
78
38
99
59

1.
1
2.
3
3

21
82
43
04
65

1.
1
2.
3.
3.

23
05
47
09
72

1.
1.
2.
3.
3.

25
08
51
14
70

1.
1.
2.
3.
3.

27
9 I
55
20
84

1.
1.
2.
3
3.

29
94
59
25
9 1

1.
1.
2.
3.
3.

31
97
64
30
97

1,
2
2,
3
4

33
00
68
36
04

1.
2.
2.
3.
4,

35
04
72
41
10

1
2,
2,
3.
4.

37
07
76
46
16

I.
2.
2.
3,
4.

40
10
80
51
23

1.
2.
2.
3.
4.

42'
13
85
57
29

1.
2.
2.
3.
4.

44
16
fi9
62
35

1.
2.
2.
3.
4.

6
7
3
9
10

4
4
5
5
6

12
72
32
92
53

4.
4.
5.
6.
A.

20
01
42
03
65

4
4.
5
6
6

27
89
51
14
77

4.
4.
5.
6.
6.

35
98
61
25
88

4.
5.
5.
6.
7.

42
06
71
35
00

4.
5.
5.
6.
7.

49
15
00
46
12

4.
5.
5,
6
7

57
23
90
57
24

4.
5.
6.
6.
7.

64
32
00
68
36

4
5,
6
6
7

72
40
09
78
48

4.
5.
6.
6.
7.

79
49
19
89
60

4
5
6
7.
7.

87
58
29
00
72

4.
5.
6.
7.
7.

94
66
38
11
94

5.
5.
6.
7.
7.

02
75
48
Z.2
96

5.
5.
6.
7.
8.

09
83
58
32
03

5.
5.
6.
7.

li
12
13
1*
15

7
7
8
8
9

14
74
36
97
59

7 . 27
7 . 09
a . 51
9 . 13
9 . 76

7
8.
8
9,
9

40
03
66
30
94

7 . 53
8 . 17
a . 81
9 . 46
1 0 . 11

7.
8.
8.
9
10.

66
31
97
63
29

7.
8.
9.
9.
10.

79
45
12
79
47

7 92

8.
8.
9
10.
10.

05
74
43
12
82

a
8
9
10
11

13
08
58
29
00

8
9.
9.
10
11.

31
02
73
45
17

8
9
9
10
11.

i, 4
16
89
62
35

3,
9,
1 0.
10
11.

57
30
04
78
53

S.
9.
10.
10.
11.

70
45
20
95
71

8.
9.
10.
11 .
11.

33
59
35
11
83

0.
9.
10.
11.
1 2.

16

10.
10
11
12
12

20
32
*5
07
70

10.
11 .
11.
12 .
12.

10.
11.
12.
12.
13.

77
42
00
74
A1

10,
11.
12.
12.

95
62
29
97
13. 6 4

11.
11.
12.
13.
13,

14
02
50
19

71
42
14
86
59

11
12
13
14
14.

90
62
35
09
02

12 0 9
12 8 3
13 5 7
14 3 1
15 06

12
1 3.
1 3.
1 4.

23
03

12
13.
13
14
15

46
99
76
54

12.
13.
14.
14 .

65
43
21
99
1 5 . 77

12
13
14
15

21

13 33

14 07
1A.
15.
16.
16.

14
1 5.
15
16
17

57
26
96
65

15 . 5 6
1 6 30
17 0 5
17 80
16 5 5

1 5 01
16 5 7
17 32
18 .0 9
10 85

1 6 . 56

43
14
80
46

14
15.
15
16
17.

32

13 9 6
14 5 9
15 2 3
15 8 7

13
14.
14.
15.
16.

82

22
23
24

1 6.
17
18
19

16
17
18
19
20

17.
18.
19
19

75

18 9 9
19 7 4
20 4 8
21 2 3

19
20
20
21

21

99

22

30
06
82
58
35

19 6 2
2 0 39
21 . 1 6
21 9 4
22 .72

19 9 3
2 0 71
21 5 0
2 2 29
23 03

20
21
21
22
23

22 74
2 3 50
2 4 26

23
23
24

2 4 26

25
2 6 23

2 3 50
2 4 28
2 5 07
25 .86
26 66

23 8 3

25 0 3
79

12
89
67
44

24 6 8
2 5 40
26 28
2 7 Q9

2 5 88
2 6 70
27 52

2 7 01

27

27

80

28

28 59
2 9 3a
30 18

29

17
18
19
20

25

26
27

28
29
30

31
32

33
34

35
36
37

30
39
40

41

39
02
66*
30
93

10 58
11 2 2
11 8 7
12 52
13 1 7

58

13
14
15
15
16

22
07

51
17

16 5 1
17 15
17-80
10 4 5
19 10

1 6 . 82
1 7 . 47
1 8. 13
1 8 . 79
19 45

17 13
17 0 0
1 A 47
19 1 4
1 9 81

19-75
20 4 0
21 0 6
21 . 7 2
22 38

2 0 . 12
20-79
21 46
2 2 . 13
2 2 . 00

20 4 9
21 1 7
21 85
22 . 5 4

23 0 4
2 3 70

23

48

23 9 2

24 3 7
25 . 0 4

24

25 71

24

16
84
2 5 . 52
2 6 , 20

61
30
26 0 0
26 7 0

26

27 . 4 0
28 1 0

45

26 . 3 9
27 .0 6
27 7 *
28 4 2
29 11

46
47
48
49

29 7 9
30 . 4 8
31 1 7
31 8 6

30
31.
31.
32.

50

32 . 5 5

3 3 . 18

42
43

44

51
52
53

54
55

56
57
58
5**

6Q

28.
28.
29.

89
58
27
97
67
36
07
77
40

27

33 25

33

33
34
35
36

34

95
65
35
05

36 . 7 6
37 4 7
38 i a
3a 8 9
39 . 61

23 23

09
61

35 32
3 6 04
36

76

37 4 8
33

20

3 8 93
39.66
4 0. 39

24
25

20

81

29 52
30 2 3

17
18
18.
19.

7A
41
08
76
44
12

80
49

96
64

11
12
12
13
14.

02
72
41
11

1 1
12.
12.
13.
14,

52
22
93
64
35

11
12
13
13
14

14 82
15 52
16 2 3
16 9 4
17 6 5

15
15
16,
17
17

06

15 31

73

16 0 4

1 8 06
1 8. 76
19 4 7
2 0 . 18
20 90

18 3 7
19 09
19 81
20 53

18
19
20
20
21

2 1 61
22 33
23 06
23 78
24 5 1

21.99
22 72
23 4 6
24.19

22 37

24 94

25

25 6 8

24
96
69

25.
25.
26
27.
2 8.

2 6 12
2 6 . 88
27 64
28.41
29.13

26 5 7
27 3 4
28 11

41

29 92

15

29

29.95
3 0 72
3 1 50
32 2 8
33 06

30 4 6
31 2 5
32 0 4
32 8 3

33 84
35 4 2

34 43
35 23
36 0 3

36
37

37 6 5

00
60
37
06

44

14
03

2 0. 17

2 0 54

87
56

21 2 4

20.
21.
22.
22.
23.

25

21
22

95

23

95
65
37

65

24

03

2 4 . 35
25. 06

24 9 0
2 5 . 51

25 77

26
26

2 6 . 48
2 7 . 19

27 91
2 8 . 62
2 9 . 34
30. 07
3 0. 79

30 9 4
31 6 6
32 3 7
33 0 9
33 . 8 2

3 1 . 52

3 4 54
35 2 7
73

35. 19
3 5 . 93
36. 60
37. 42

32. 25
32. 9 8
3 3 . 71
34. 45

36
36
37

00
46

3 8. 17

38
38
39
A0
41

.20
94
68
.42

38 9 2
39. 68
4 0. 43
41 19

17

41 95

27
28
29.
29
30

59

8.
9.
9.
10

38

35

24
97
70
44
18

67

27

33

21 26

26
27

27
28
29
30

42
17
92
63

44
19

88
62
3 1. 3 6

30 42
3 1 . 17
31. 92

30 9 6
31 72
32

49

32
32
3 3.
34
35

10
04
59
3A
09

32 68
33. 4 4

33

35

26
03
81
59

36

37

35 0 4
3 6 . 60
37 3 6
3 8 . 12
38 88

36 4 9
3 7 27
3 8 . 0A

39
40
41
A1
42

65
42
19
96
74

34.20
3 4. 9 6
35, 73

34
34

37

15

37

94

3 8. 82

38 72
3 9 52

39 . 60

40

40 3 8

41 11
41 9 1
42.71

41
41

16
95
4 2 . 74
4 3 53

31

43 5 I
44 . 3 2

23

50
22 ( i t
95 T ? r
68
41

15
88
62

11

23 0 6
24

34

61
36

63
21
01

3 7 , 81
3 8, 61
39
40
41

41

41
22
03

84
42 , 65
4 3 47
4 4 29
4 5 11

25

28 8 9
29 6 8

33 6 3

36

38
39
40
4U
41

84

46

28
10
92
74

97
78
3 2 58
33 39
3 4 20
30
31

35 01
35

83

3 6 65
37
30

47
30

39
39

40

44

15

23

45 00
45 8 5
4 6 71

07

91

16 O' j
03
60
37

15

31 4 9

32 0 1
32 8 4

29
30

32
33

31

13

29 53
30 36
3 1 . 18

77

33. 67
3 4 . 51
35. 35

35 60
36 43
3 7 27
39 10
38 9 4

36 1 9
37 0 4
37 . 8 8
38. 74
3 9. 5 9

33 95
34

4 4 . 05
4 4 91
45 77
46 64

31

54

15, 30

27 9 0
2 8 72

3 9 79
4 0 63
41 4 8

43

73

46
26
06
07
68

12
96
40 79
41 6 3
4 2 47

42 5 7
43
44
45
45

lT .7i*

FINAN CED ]

4 2 33
4 3 19

47 51

40 4 5
41
42.
43.
43.

31
17

04
91

44 79
45. 66
46. 5 4

4 7 42
4 3. 31

23

1 6 31
17. 09
17 e a
1 8 66
19 45

25

24

04
04
64

45

07

28 3 5
. 29 18
30 01

1 7 . 36

1 8 . 15
i a . 95
1 9. 75
20.
21.
22.
22.

56
37

24.
25.
26.
27.
27.

64
46

18
99
2 3 . 81

46
19
93
67
42

I.
2.
2.
3.
4.

43
22
97
T3
48

17
92
67
43
a. 1 9

5.
6.
6.
7.
8.

24
00
77
54
31

96
50
28
06

9.
9.
10.
11.
12.

09
87
66
45
24

84
63
42
22
16. 01

13.
13.
14 .
15.
16.

03
93
64
44
25

20
21,
22
23
24.

73

at

1 7 . 07

62
43
24

1 7.
18.
19.
20.

AS
70
53
36

21.
22.
22.
23.

19
02
86
70

05
87
69

52
35
13

25. 0 2

12

27 5 4

2 5 . 40
2 6 . 25
2 7 . 11
27. 97

96

28

2 8 . 33

29

2 8 . 80

25
26

86

70
39

30
31

85
68

3 2 . 19

29 2 5
3 0. 1 0
30 9 6
31 8 3
32 6 9

32
33
34
35
35

52

3 3 . 04

33 5 6

37
22
07
92

3 3 . 90
3 4 . 76
3 5 . 63
3 6 . 50

34 4 4
35. 31
36 19
37. 09

78

3 7 . 37
39 . 25
3 9 . 13
4 0 . 01

37. 96
38. 8 6

36

37 6 4
38
39
40

50
3?
24

41
41
42
43
44

It
99
07

2 9 . 64
3 0 . 49
3 1 . 34

4 0 . 39

39. 7 5
40. 65
41 5 5

4 1 . 7.8

42. 45

4 2 . 67

43 . 36
44. 27
4 5 . 18
4 6. 1 0

75

4 3 . 57
4 4 . 47

64

4 5 . 37

45 53

46. 27
4 7 . 18

46 42
4 7 32
48 21
49 12

2 4 . 55

4 8 . 09
4 9 . 01

47 0 2
47. 94
4 8. 0 7
49. 0 0

4 9 . 92

50. 7 3

2 9 . 70
3 0 . 57

31 . 44
3 2 . 32
3 3 . 20
34.
34.
35.
36.

03
97
86
76
37. 66

38.
39.
40.
41.

56
46
37
29
42. 2a

4 3 . 12
4 4 . 04
4 4 . 97
4 5 . 90
4 6 . 83

4 7 . 77
4 8 . 71
4 9 . 65
50. 60
5 1 . 55

The table shown on the opposite page (Exhibit G) is one page out of the tables
compiled by the Federal Reserve Board to assist creditors in figuring out the annual
percentage rate of the cost of credit, or the amount of the finance charge for a given rate.
These tables are described on page 4 of this pamphlet.

REGULATION

z
(12 CFR 226)
Effective July 1,1969

TRUTH IN LENDING

ERRATA

The f o llo w in g e r r o r s h a v e b e e n fo u n d i n th e
s e c t i o n o f t h e p a m p h l e t " W h a t Y o u O u g h t t o K now A b o u t
R e g u la tio n Z ", an d sh o u ld b e c o r r e c te d :
(1 )
tio n

22, th i r d

fro m

la s t

lin e ,

th e

referen ce

to

sec­

226.7 s h o u l d b e 226 . 8 .

sh o u ld b e

be to

Page

b u ff-c o lo re d
F e d e ra l R eserv e

(2)
(b )

( 3)
(d )(2).

P ag e 2 6 , t h i r d fro m l a s t l i n e ,
a n d ( d ) o f s e c t i o n 226 . 8 .
P a g e 27 , l a s t

lin e ,

th e

th e

p ara g ra p h

tw o r e f e r e n c e s

to

referen ces

(c)(6)

sh o u ld


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102