law

Regulation Z

Regulation Z is the federal rule that implements the Truth in Lending Act. It requires lenders to disclose the true cost of consumer credit, including the annual percentage rate and finance charges, and it regulates credit advertising. If an ad includes a trigger term, such as the down payment, number of payments, or payment amount, it must also disclose other key terms. It also gives a right of rescission for certain refinances.

Exam tip: Know the trigger-term rule: mentioning a specific payment, down payment, or number of payments requires full disclosure, while general phrases like "easy terms" do not. Stating only the APR is allowed.
Example: An ad saying "Only $1,200 per month!" contains a trigger term, so it must also state the APR, down payment, and repayment terms.

1. Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

Answer & explanation

Answer: A. Specific terms like the down payment amount, number or amount of payments, finance charge or repayment period trigger full disclosure (including APR). General statements do not.

Related terms & state variants

annual percentage rate rescission TRID Truth in Lending Act

Sources

Source verification pending. Confirm current requirements with your state regulator.

Last verified: 2026-10-23