If the correct APR of a regular consumer loan is 8.00%, which of the following APRs would be a Reg Z violation?

The annual percentage rate (APR) is a critical figure under Regulation Z (Truth in Lending Act) because it provides borrowers with a clear understanding of the cost of credit over the loan term. According to Regulation Z, APR must accurately reflect the cost of the loan and cannot be misleading to consumers.

In this case, if the correct APR of a regular consumer loan is stated as 8.00%, any APR that deviates from this figure and is not within an acceptable tolerance of error would constitute a violation of Regulation Z. Generally, a tolerance of 1/8th of a percentage point (or 0.125%) is allowed when calculating the APR disclosure.

Given that the correct APR is 8.00%:

• An APR of 7.85% is below this threshold and falls outside the acceptable range, making it a violation.

• An APR of 7.90% is still not in compliance because it is also below the allowable tolerance.

• An APR of 8.05% remains within the acceptable range, as it is only slightly above the correct APR.

• An APR of 8.20% exceeds the correct APR by more than the allowable error, thus also being a violation.

Options A and D both