Opinion ID: 401053
Heading Depth: 2
Heading Rank: 3

Heading: Disclosure of the Annual Percentage Rate of Interest

Text: 36 At the time the October contract was executed, Regulation Z required Metalcraft to disclose the annual percentage interest rate with an accuracy at least to the nearest 1/4 of one percent. See 12 C.F.R. § 226.5(b) (amended on Dec. 31, 1979 to require accuracy to within the nearest 1/8 of one percent). Davis alleges that, because the contract discloses an annual interest rate of 22.29%, Metalcraft has violated § 226.5(b), because the actual annual rate is 22.00%, which means that the deviation is greater than the permitted 1/4 of one percent. 37 This argument, however, overlooks 12 C.F.R. § 226.6(h). Davis alleges that the contract overstates the correct rate of interest, and § 226.6(h) provides that overstatements of percentage rates do not constitute TILA violations, unless the overstatement is for the purpose of circumvention or evasion of disclosure requirements. Thus, because there are no allegations or showing of intent to evade disclosure requirements, the plaintiff's argument on this issue is without merit. 38 D. Disclosure of the Method of Computing Any Unearned Portion of the Finance Charge in the Event of Payment 39 Because the October contract included a precomputed finance charge, Metalcraft was required to identify the method of computing any unearned portion of the finance charge in the event of prepayment, and to state the amount or method of computing any charge that might be deducted from the amount of any rebate of such unearned finance charge. See 12 C.F.R. § 226.8(b)(7). Davis concedes that such a disclosure was made in the challenged contract, but she asserts that the wording of the disclosure is ambiguous and incomprehensible. The relevant portion of the contract states: 40 REBATE FOR PREPAYMENT IN FULL: There is no prepayment penalty and a refund of the finance charge will be given based on a rebate of 6% per annum on all installments paid in advance. 41 We find this disclosure to be adequate. In our opinion, the provision unambiguously entitles the consumer to a rebate of a full 6% on an installment paid twelve months in advance, to a rebate of 11/12 of 6% on an installment paid eleven months in advance, and so forth. The courts and the Federal Reserve Board (the agency authorized by Congress to promulgate TILA-implementing regulations) have declined to require lengthy and complicated mathematical statements of rebate formulas, on the theory that they would be uninformative to the consumer, and would be likely to detract from other important disclosures. See, e.g., Bone v. Hibernia Bank, 493 F.2d 135, 139-40 (9th Cir. 1974). We therefore hold that Metalcraft complied with Regulation Z.