If a bank only charges application fees to applicants whose loans are approved, do these fees have to be included in the finance charge?

The correct answer is that application fees charged to applicants whose loans are approved must be included in the finance charge. According to Regulation Z, the finance charge encompasses any fees that are imposed as a condition for the loan, which includes application fees that aren't refundable and are charged regardless of the applicant's creditworthiness.

This requirement serves to ensure that consumers are fully informed about the total cost of borrowing, helping them to compare different loan products more effectively. Including such fees in the finance charge provides greater transparency and protects consumers from potentially deceptive lending practices.

Other options are not correct as they provide exceptions or conditions that do not align with the clear guidelines set forth by Regulation Z regarding what constitutes a finance charge. The regulation explicitly dictates that any charge made by the lender as part of the loan cost must be included, thereby making it unnecessary to consider loan type or contract specifics in this instance.