Regulation JJ disclosure of credit terms and fees to consumers USA

Regulation JJ is a regulation issued by the Federal Reserve Board (FRB) under the Truth in Lending Act (TILA). It sets out rules for the disclosure of credit terms and fees to consumers. It requires that certain information be provided to consumers in a standardized format, such as the annual percentage rate (APR), the finance charge, and the total of payments. The regulation also includes provisions for the disclosure of information about credit insurance and other optional products. The purpose of Regulation JJ is to ensure that consumers are provided with clear and accurate information about the costs and terms of credit, so that they can make informed decisions about borrowing money.

The regulation applies to both closed-end and open-end credit transactions, which are different types of credit agreements. A closed-end credit is a loan with a fixed term and a fixed amount, such as a car loan or a home mortgage. An open-end credit is a line of credit that can be borrowed against multiple times, such as a credit card account.

The scope of Regulation JJ covers the disclosures that must be given to consumers before they enter into a credit transaction, and also applies to the advertisements of credit terms. The regulation applies to all creditors, including banks, credit unions, finance companies, and other lending institutions.

However, there are certain types of credit transactions that are exempt from the requirements of Regulation JJ, such as credit transactions by non-profit organizations, credit transactions secured by real estate, and credit transactions under certain government programs.

Key provisions of the regulation include:

  • Annual Percentage Rate (APR) Disclosure: Lenders are required to disclose the APR, which is the cost of credit expressed as a yearly rate. The APR must be disclosed prominently and accurately, so that consumers can compare the cost of different credit products.
  • Finance Charge Disclosure: Lenders must disclose the finance charge, which is the dollar amount the credit will cost the consumer.
  • Total of Payments Disclosure: Lenders must disclose the total of payments, which is the amount the consumer will have paid by the end of the loan including the principal and interest.
  • Credit Insurance Disclosure: Lenders must disclose any credit insurance products that are offered in connection with the credit transaction, including the cost and the terms of the insurance.
  • Right of Rescission: Consumers have the right to cancel certain credit transactions within three days after signing the loan agreement.
  • Advertising Disclosure: Lenders must disclose the APR, the finance charge and the total of payments in any advertising of credit terms.
  • Penalty Fees: Lenders must disclose any penalty fees that may be imposed for late payments or other violations of the loan agreement.
  • Prepayment Penalties: Lenders must disclose any prepayment penalties that may be imposed if the consumer pays off the loan early.

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