When is truth in lending re-disclosure required?

When is truth in lending re-disclosure required?

• A. When a loan servicer changes the payment terms
• B. When APR differs from the disclosed rate by more than 1/8%
• C. When the borrower requests additional financing
• D. When a borrower makes a late payment

Answer: (B)

Truth in Lending re-disclosure is required primarily to ensure that borrowers receive accurate and clear information about the terms of their loans. When the Annual Percentage Rate (APR) differs from the originally disclosed rate by more than 1/8%, this indicates a significant change in the loan's cost that can affect the borrower's decision-making process. The regulation mandates that lenders provide updated disclosures to keep borrowers informed, which helps them understand the true cost of their credit and make better financial choices. In the context of the other options, changing payment terms or a borrower requesting additional financing does not necessarily trigger re-disclosure under the same circumstances as a change in APR. A late payment by the borrower impacts the payment schedule but does not directly alter the terms of the loan in a way that would require a re-disclosure of the APR. Thus, the focus on significant changes in the APR ensures that borrowers are fully equipped with the latest and most accurate financial information related to their loans.

Truth in Lending re-disclosure is required primarily to ensure that borrowers receive accurate and clear information about the terms of their loans. When the Annual Percentage Rate (APR) differs from the originally disclosed rate by more than 1/8%, this indicates a significant change in the loan's cost that can affect the borrower's decision-making process. The regulation mandates that lenders provide updated disclosures to keep borrowers informed, which helps them understand the true cost of their credit and make better financial choices.

In the context of the other options, changing payment terms or a borrower requesting additional financing does not necessarily trigger re-disclosure under the same circumstances as a change in APR. A late payment by the borrower impacts the payment schedule but does not directly alter the terms of the loan in a way that would require a re-disclosure of the APR. Thus, the focus on significant changes in the APR ensures that borrowers are fully equipped with the latest and most accurate financial information related to their loans.