- Under the Truth in Lending Act, any advertisement of interest rate must be for the annual percentage rate or APR, using either form of that term. An advertisement that does not use that term violates TILA.
- Even though you may use a toll-free number to make full lease disclosures, some things must be disclosed in the ad itself:
-That the transaction advertised is a lease;
-The total amount due before or at consummation, or by delivery if delivery occurs after the consummation; and
– The number, amounts, and due dates of scheduled payments
- Often dealers seek to advertise low annual lease rates or to equate lease rates to APR. Under the Consumer Leasing Act, in advertising a lease rate, you may not use the term “Annual Percentage Rate”, “Annual Lease Rate” or other equivalent term. If you advertise a lease rate, this statement must appear near the rate with no intervening language or symbols: “This percentage may not measure the overall cost of financing the lease.”
- You may advertise certified pre-owned vehicles. Under federal law, you may advertise and sell pre-owned vehicles with open recalls if you can’t fix them because a fix has not been prescribed or parts are unavailable. However, you cannot advertise and sell a certified pre-owned vehicle if it has an open recall. According to the FTC, “certified” contains an implication of safety that is not true if there is an open recall. If a vehicle has an open recall you cannot advertise or sell it as certified, represent it has passed a multi-point safety inspection, or make other representations about its safety. The FTC has sued dealers over similar advertisements and entered consent orders with them.
- Nothing is wrong with this advertisement. As long as a dealer advertises an available rate as the annual percentage rate or APR, it is appropriate. And APR advertising is not a trigger term, so no follow-on disclosures are necessary. However, If you advertise a limitation on the duration of credit at the advertised APR (“”0.9 APR available for up to 60 months”), the number of payments is a trigger term, and you then must make further disclosures under TILA. In advertising credit for a motor vehicle, any of the following is a trigger term:
- The amount of the downpayment (expressed as either a percentage or dollar amount);
- The amount of any payment (expressed as either a percentage or dollar amount);
- The number of payments or the period of repayment; or
- The amount of any finance charge.
If you use a trigger term, you then must disclose:
- The amount or percentage of the down-payment;
- The terms of repayment; and
- 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.