TriggeringTerm – The Importance of Triggering Terms

What is Triggering Term?

TriggeringTerm is a word that is used for the amount or percentage of down payment, a number of payments, period (term) of payment, amount of any payment, and the amount of any finance charges. In Lending Act, the Truth warrants that creditors give certain details if credit terms known as TriggeringTerm are included in the advertisement. These terms are intended to help consumers compare credit and lease offers on a fair and equal basis. The U.S. Federal Trade Commission (FTC) monitors and sets Triggering terms.

TriggeringTerm - The Importance of Triggering Terms

Understanding Triggering Terms

As earlier stated, credit advertising must abide by the Truth in Lending Act passed in 1969, be it in print, broadcast, or online. The Lending Act guards credit advertising standards. The rule helps consumers from predatory advertising and lending practices by assuring the disclosure of consumer credit and lease terms.

How Important is Triggering Terms

TriggeringTerm helps to open the conditions under which a consumer borrows money. In a case where an advertiser uses any number of terms of a credit agreement, like how the money fess are computed, when a charge can be imposed, and charges computed as an annual percentage rate, then the advertisement must also contain certain specified details.

Examples of Triggering Terms

Examples of triggering terms include open-end and closed-end arrangements and leases,. Each has a set of terms linked with them. For instance, if any of the following sample triggering terms are used in advertising, then disclosures have to be made:

  • Firstly, the Total time needed to pay and the period to payback.
  • Secondly, The finance charge amount.
  • The amount of down payment expressed as a percentage or a dollar amount.
  • The amount of any payment which is expressed as a percentage or a dollar amount.
  • Also, The number of payments.

If any of the terms above are used, then the following has to be disclosed:

  • The amount or percentage of the down payment.
  • Furthermore, The repayment terms
  • The annual percentage rate (APR): the term has to be spelled out.
  • Lastly, If the APR can be raised after the credit has been extended, then the fact has to be disclosed.

However, some terms or phrases do not trigger more details. Some of these terms are financing available, low or no down payment, easy monthly payments, pay weekly, as well as terms to fit your budget.

Moreso, checking disclosures. Can help consumers get a good picture of the cost of borrowing money. On the other hand, being ignorant of the terms of a loan and the charges incurred can cause a consumer to pay more than is meet for credit or become more indebted than should be.

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