§ 1606. Determination of annual percentage rate
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/usc/title-15/section-1606A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)“Annual percentage rate” defined The annual percentage rate applicable to any extension of consumer credit shall be determined, in accordance with the regulations of the Bureau,
(1)in the case of any extension of credit other than under an open end credit plan, as
(A)that nominal annual percentage rate which will yield a sum equal to the amount of the finance charge when it is applied to the unpaid balances of the amount financed, calculated according to the actuarial method of allocating payments made on a debt between the amount financed and the amount of the finance charge, pursuant to which a payment is applied first to the accumulated finance charge and the balance is applied to the unpaid amount financed; or
(B)the rate determined by any method prescribed by the Bureau as a method which materially simplifies computation while retaining reasonable accuracy as compared with the rate determined under subparagraph (A).1
(2)in the case of any extension of credit under an open end credit plan, as the quotient (expressed as a percentage) of the total finance charge for the period to which it relates divided by the amount upon which the finance charge for that period is based, multiplied by the number of such periods in a year.
(b)Computation of rate of finance charges for balances within a specified range Where a creditor imposes the same finance charge for balances within a specified range, the annual percentage rate shall be computed on the median balance within the range, except that if the Bureau determines that a rate so computed would not be meaningful, or would be materially misleading, the annual percentage rate shall be computed on such other basis as the Bureau may be regulation require.
(c)Allowable tolerances for purposes of compliance with disclosure requirements The disclosure of an annual percentage rate is accurate for the purpose of this subchapter if the rate disclosed is within a tolerance not greater than one-eighth of 1 per centum more or less than the actual rate or rounded to the nearest one-fourth of 1 per centum. The Bureau may allow a greater tolerance to simplify compliance where irregular payments are involved.
(d)Use of rate tables or charts having allowable variance from determined rates The Bureau may authorize the use of rate tables or charts which may provide for the disclosure of annual percentage rates which vary from the rate determined in accordance with subsection (a)(1)(A) by not more than such tolerances as the Bureau may allow. The Bureau may not allow a tolerance greater than 8 per centum of that rate except to simplify compliance where irregular payments are involved.
(e)Authorization of tolerances in determining annual percentage rates In the case of creditors determining the annual percentage rate in a manner other than as described in subsection (d), the Bureau may authorize other reasonable tolerances.
(Pub. L. 90–321, title I, § 107, May 29, 1968, 82 Stat. 149; Pub. L. 96–221, title VI, § 607, Mar. 31, 1980, 94 Stat. 170; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.)
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- Public Law 109–364To authorize appropriations for fiscal year 2007 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes
- Public Law 96–221To facilitate the implementation of monetary policy, to provide for the gradual elimination of all limitations on the rates of interest which are payable on deposits and accounts, and to authorize interest-bearing transaction accounts, and for other purposes
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- 1
- Pub. L. 90–321, title I, § 107
- 82 Stat. 149
- Pub. L. 96–221, title VI, § 607
- 94 Stat. 170
- Pub. L. 111–203, title X, § 1100A(2)
- 124 Stat. 2107
- Pub. L. 111–203
- Pub. L. 96–221, § 607(a)
- Pub. L. 96–221, § 607(b)
- Pub. L. 96–221, § 607(c)
- section 1100H of Pub. L. 111–203
- Pub. L. 96–221
- section 625 of Pub. L. 96–221
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§ 1606
Determination of annual percentage rate
U.S.C.×15
Bills×7
Fed. Reg.×6
Stat.×4
C.F.R.×1
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Cite1
Pub. L.Pub. L. 90–321, title I, § 107
Stat.82 Stat. 149
Pub. L.Pub. L. 96–221, title VI, § 607
Stat.94 Stat. 170
Cites 16 · showing 7Cited by 34 across 6 sources