True or False: The right of rescission applies to home improvement loans unless the loan's purpose is to purchase or construct the dwelling.

The statement is true because the right of rescission is a consumer protection feature under the Truth in Lending Act, specifically within Regulation Z. This right allows consumers to cancel certain types of loans within three business days of closing, thereby providing a safeguard against coercive lending practices.

In the context of home improvement loans, the right of rescission typically applies unless the loan is specifically for the purchase or construction of a dwelling. The rationale is that these types of loans are intended to enhance the value of an existing home, rather than taking on new debt for acquiring property. Therefore, home improvement loans maintain the right of rescission as they involve transactions that could potentially be high risk for borrowers who may not fully understand the terms or implications.

This understanding is essential for determining under what circumstances the right of rescission is applicable and highlights the consumer protective measures in place within Regulation Z.