Question

A business regularly extends credit to customers for large purchases with a standard interest rate of 5percent. There is also a $200 installment fee that is added to the total cost of the purchase. The salespeople are required to tell customers about this fee before adding it to the bill, but it is not in writing.Does this comply with the Truth in Lending Act?
(1 point)
No, adding any kind fee is deceptive and illegal.
Yes, consumers expect that there will be installment fees.
No, all details of the terms of credit must be documented in writing.
Yes, as long as the customer is informed of all fees, the business has done its duty.
A)
A business regularly extends credit to customers for large purchases with a standard interest rate of 5percent. There is also a $200 installment fee that is added to the total cost of the purchase. Whatshould the business do before extending credit to a regular customer?
(1 point)
Ask the customer the monthly payment they can afford.
Check the customer’s credit report to minimize the risk.
Nothing since the customer has a history with the company.
Require the customer to tell the business about any existing debts

Answer 1

1) No — all details of the terms of credit must be documented in writing. (TILA/Reg Z requires written disclosures of finance charge, APR, payment schedule, etc.)

2) Check the customer’s credit report to minimize the risk. (Even for regulars, you should verify ability and creditworthiness before extending credit.)