Which of the following statements is permissible in an advertisement?

Which of the following statements is permissible in an advertisement?
A . "Current interest rates as low as 3.50% with an APR of 3.99%. Contact us today!"
B . "Looking for a VA loan? We are endorsed by and affiliated with the VA administration."
C . "Take out a reverse mortgage loan with us, and you can stay in your home as long as you want and never make a payment."
D . "Close a mortgage loan with us within the next 60 days and when interest rates drop, we will
refinance your loan at a lower rate guaranteed."

View Answer

Answer: A

Explanation:

The statement "Current interest rates as low as 3.50% with an APR of 3.99%. Contact us today!" is permissible under TILA and Regulation Z, provided it accurately reflects the current rates and corresponding Annual Percentage Rate (APR).

Regulation Z requires that if an advertisement states an interest rate, it must also disclose the APR to ensure consumers understand the true cost of the loan, including fees and other finance charges.

The other statements are prohibited due to potential misrepresentation:

B (affiliation with the VA) could be misleading unless it is an actual endorsement, which is rare.

C (no payments with a reverse mortgage) could mislead consumers about the conditions of a reverse mortgage.

D (guaranteed refinancing) could be misleading as future refinancing depends on market conditions and the borrower’s qualifications.

References:

Truth in Lending Act (TILA)

Regulation Z Advertising Rules