If both the disclosed finance charge and the APR are understated, will the disclosed APR be considered accurate?

The correct choice highlights that the accurate disclosure of the Annual Percentage Rate (APR) is contingent upon whether it falls within permissible tolerances. Under the Truth in Lending Act (TILA) and Regulation Z, creditors must disclose the APR and finance charges accurately. However, minor discrepancies, or understatements, can sometimes be tolerated as long as they comply with the established thresholds defined in Regulation Z.

If both the disclosed finance charge and APR are understated, the disclosed APR could still be considered accurate if it remains within the ranges of tolerances that regulation allows. This is typically measured against the actual APR, taking into account the allowable tolerances specified in the regulation. Thus, if the understated disclosure does not exceed these tolerances, it could still be deemed compliant.

This understanding reflects the balance that regulation seeks to maintain between protecting consumers with accurate information and allowing for minor variances that do not significantly affect the overall understanding of the loan terms.