We have loan officers that speak to consumers by phone or face-to-face and are constantly being asked the interest rate by these consumers. But we do not know if they are supposed to be quoting just the interest rate or also the Annual Percentage Rate (APR). Should we provide the interest rate in terms of the APR?
If a creditor responds orally to a consumer’s inquiry about the cost of credit, such as by phone or face-to-face, only the APR may be stated, with the exception that the creditor may, but is not required to, state the simple annual rate or periodic rate if the rate is applied to an unpaid balance.
However, if the APR cannot be determined in advance, the APR for a sample transaction must be stated, and other cost information for the consumer’s specific transaction may be given.
[12 CFR § 226.26(b)]
President & Managing Director
Lenders Compliance Group