Which of the following statements is NOT true regarding deferred down payments under TILA/Reg Z?

When considering the treatment of deferred down payments under the Truth in Lending Act (TILA) and Regulation Z (Reg Z), it's important to understand how financing and payment structures are classified.

The statement that finance charges can be assessed on a deferred down payment is not true. Under TILA, a deferred down payment is not treated as part of the amount financed; instead, it is typically considered a part of the payment structure that does not incur finance charges. This is because finance charges are generally applied to the amount that is financed or borrowed rather than to deferred down payments, which are not instantaneously paid.

On the other hand, the other statements hold true under TILA/Reg Z. Deferred down payments must indeed be settled at or before the second payment, ensuring that the consumer does not carry a balance for an extended period without resolution. They are also not included in the amount financed since they are not considered part of the loan amount that accrues interest. Lastly, deferred down payments can be recorded on the installment sale contract to provide clear terms regarding the payment schedule.

Understanding this framework is crucial for complying with lending regulations and providing clear and accurate information to borrowers.