According to Regulation Z, is it necessary to disclose the APR and the Finance Charge?

The correct understanding is that, according to Regulation Z, it is indeed mandatory to disclose both the Annual Percentage Rate (APR) and the Finance Charge. Regulation Z is part of the Truth in Lending Act (TILA), which aims to promote informed consumer choice and transparency in lending.

The APR provides borrowers with a clear view of the cost of borrowing, expressed as a yearly interest rate that includes not only the interest but also certain fees and charges, while the Finance Charge represents the total cost of credit expressed in dollar terms. By requiring both disclosures, Regulation Z ensures that consumers are fully aware of the true costs associated with a loan, enabling them to make better-informed financial decisions. This dual disclosure requirement is a critical aspect of consumer protection in lending practices.

Thus, stating that the requirement is mandatory aligns with the intent of Regulation Z to foster transparency and comparability in credit options for consumers.