According to Regulation Z, which of the following phrases in an advertisement requires full disclosure of credit terms in that advertisement?

Rationale

Only $500 per month requires full disclosure of credit terms in the advertisement.

This phrase specifies a monthly payment amount, which triggers the requirement for the advertiser to disclose all relevant credit terms to ensure transparency for consumers.

A (no payment until June) CORRECT

This phrase suggests a deferred payment option but does not specify any terms related to interest rates, total cost, or other fees. While it may imply a credit arrangement, it does not provide enough detail to necessitate full disclosure under Regulation Z.

B (low down payment) YOUR ANSWER

The term "low down payment" is vague and does not indicate the actual amount or the specific terms associated with it. This lack of specificity means that it does not require full disclosure of credit terms, as the necessary details are not explicitly stated.

C (only $500 per month) YOUR ANSWER

This phrase clearly states a specific monthly payment amount, which under Regulation Z requires the disclosure of all credit terms, including the annual percentage rate (APR), the total cost of credit, and any other fees associated with the loan. This ensures consumers have comprehensive information to make informed decisions.

D (no extra charges) YOUR ANSWER

While this phrase suggests that the consumer will not incur additional fees, it does not provide sufficient information regarding the credit terms themselves. As such, it does not trigger the full disclosure requirement under Regulation Z, which is focused on more specific financial commitments.

Conclusion

Full disclosure of credit terms is mandated by Regulation Z when advertisements contain specific financial figures that affect consumer choice. Among the provided options, "only $500 per month" explicitly outlines a payment obligation, thereby necessitating comprehensive disclosure of relevant credit terms to protect consumers from misleading practices. The other options lack the specificity required to invoke such disclosure, highlighting the importance of clarity in financial advertisements.

According to Regulation Z, which of the following phrases in an advertisement requires full disclosure of credit terms in that advertisement?

Only $500 per month requires full disclosure of credit terms in the advertisement.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test