For the right of rescission, when is the APR considered accurate?

The accurate assessment of when the Annual Percentage Rate (APR) is considered acceptable relates to the tolerances allowed under Regulation Z. Under these regulations, the APR is deemed accurate if it is understated by no more than $100. This tolerance reflects the recognition that minor discrepancies in the APR calculation should not unduly harm consumers or infringe upon their right to rescission.

The rationale behind this threshold is to balance consumer protection with the practicalities of lending transactions. If the APR is understated by more than this amount, it can mislead consumers regarding the cost of credit, which can affect decisions related to their loan and rescission rights. An accurate APR is critical to ensuring borrowers can fully understand their financial obligations and rights.

The other thresholds listed, such as understating by a specific percentage or dollar amount that falls below $100, do not align with the regulations regarding the accuracy of the APR in the context of the right of rescission. Therefore, the specified amount of $100 is key to the legal framework of lending practices and consumer rights.