Q: So, the question, first question is, “On a closed-end loan, is there an exact calculation to help us calculate the MAPR with a debt collection, for example, life, disability, involuntary employment product? This will be charged based on the declining balance of a loan.” Second question is also an ancillary product on a closed-end loan such as gap and/or warranty based on a declining balance of the loan.
A: Yes, for closed-end credit, the rule requires a creditor to follow the rules for calculating and disclosing the APR for credit transactions under Regulation Z based on the charges required for the MAPR as set forth in Section 232.4(c)(1).
In general, the procedures for calculating the APR for closed-end credit under Regulation Z are found in Section 1026.22(a)(1). The explanations and instructions for computing the APR are set forth in Appendix J to Regulation Z.