Under the Truth in Lending Act, if an advertisement for closed-end credit contains any of the "triggering terms" below, the ad must also contain the following information:

(1) the amount or percentage of the down payment;

(2) the terms of repayment; and

(3) the "annual percentage rate," using that term or the abbreviation "APR." If the annual percentage rate may be increased after consummation of the credit transaction, that fact also must be stated.

Triggering Terms

The "triggering terms" are:

(1) The amount of the down payment (expressed as either a percentage or dollar amount) in a "credit sale" transaction.

* For example: "10 percent down," "$ 1,000 down," "90 percent financing," and "trade-in with $ 1,000 appraised value required."

* A "credit sale" is a transaction in which the seller is also the creditor, at least initially. Often, the seller-creditor will later assign the installment sales contract to another entity, such as a finance company or a bank.

(2) The amount of any payment (expressed as either a percentage or dollar amount).

* For example: "Monthly payments less than $ 250 on all our loan plans," "Pay $ 23.44 per $ 1,000 amount borrowed," and "$ 210.95 per month."

(3) The number of payments or the period of repayment.

* For example: "Up to four years to pay," "48 months to pay," and "30-year mortgages available."

(4) The amount of any finance charge.

* For example: "Financing costs less than $ 300 per year," "Less than $ 1,200 interest," "$ 2 monthly carrying charge."

General Statements

Some statements about credit terms are too general to trigger additional disclosures. For example, the following terms do not trigger the required disclosures: "No down payment," "Easy monthly payments," "Loans available at 5 percent below our standard APR," "Low down payment accepted," "Pay weekly," "Terms to fit your budget," or "Financing available." General statements, such as "take years to pay" or "no closing costs," do not trigger further disclosures because they do not state or suggest the period of repayment or down payment cost. In contrast, the statement "drive it home for $ 199," which implies that the required cash down payment is no more than $ 199, does trigger full disclosure. Similarly, a statement such as "up to 48 months to pay" lists the period of repayment and triggers disclosure. In general, the more specific the statement, the more likely it is to trigger additional disclosures.

Copyright 2010 LexisNexis, a division of Reed Elsevier Inc.