The four trigger terms in closed-end credit advertising

A mortgage or other closed-end credit advertisement can trigger extra disclosures by quoting selected loan terms. These terms attract attention because they can make credit sound inexpensive or easy to repay. Regulation Z requires additional context when an advertisement includes one of the specified terms; a creditor cannot advertise a payment figure while hiding the repayment structure it represents.

The four trigger terms

1. The amount or percentage of any downpayment.
2. The number of payments or the period of repayment.
3. The amount of any payment.
4. The amount of any finance charge, including a rate of finance charge.

Examples include “10% down,” “30-year mortgage,” “$1,500 per month,” or a stated dollar finance charge. Vague phrases such as “easy monthly payments” may not specify a payment amount or repayment period. The exact interpretation follows §1026.24(d) and its official commentary.

What the advertisement must add

When one or more trigger terms appear, the advertisement must include the total downpayment as a dollar amount or percentage, the terms of repayment reflecting the repayment obligations over the full term, and the annual percentage rate using that term. If the APR may increase after consummation, the ad must say so. Repayment terms should not omit a later payment level or balloon payment merely because the initial monthly amount looks low.

A trigger is not just an interest rate

The amount of a finance charge is a trigger. But an APR statement by itself is treated differently under the rule's definitions and commentary than a quoted dollar finance charge. Also, dwelling-secured advertising has additional provisions, including rules for advertised interest rates. Analyze the exact claim and the transaction type instead of assuming that every number in an ad triggers the same disclosure set.

Actually available terms still apply

Any specific credit terms stated in an advertisement must be terms the creditor actually is or will be prepared to offer. Trigger disclosures do not make a misleading teaser rate lawful. The creditor must also follow clear-and-conspicuous requirements and the rule's additional provisions for dwelling-secured transactions and particular media.

Exam method

1. Classify the ad as closed-end or open-end credit.
2. Mark whether it states a downpayment, number or period of payments, payment amount, or finance-charge amount.
3. If triggered under §1026.24(d), add the applicable downpayment, repayment schedule and APR disclosures.
4. Check for variable-rate language, balloon payments, dwelling-secured requirements and media-specific rules.
5. Confirm every stated term is actually available from the creditor.

Key takeaway

Memorize the four terms: downpayment, number or period, payment amount, and finance-charge amount. A single trigger pulls in additional disclosures that show the full cost and repayment obligation.