Q: Credit union writes that, “We offer credit life, disability, and unemployment insurance on our loans. On the application for the insurance, the estimated total fees for options chosen is listed. We bill the first premium monthly payments starting at month end after confirmation, and this can be canceled at any time. No payments are made prior to confirmation.” So the question is, “Do we include the entire estimated total fees for options chosen in the MAPR calculation?”
A: The MLA regulation requires your credit union to include in the MAPR all such charges imposed as applicable to the extension of credit. The regulation directs the credit union to use the Reg Z methods for computing APR when calculating the MAPR. Therefore, you should comply with the Regulation Z APR methodology regardless of whether the credit is open-end or closed-end.