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Loan Interest Rate Discount for Automatic Tran

Answered by: 
Andy Zavoina | CRCM

Question: 
We offer a discount on interest rate if the member elects to have an automatic transfer of the loan payment from his saving/checking account with us. Is this a violation of Reg. E related to compulsory use of preauthorized transfers?
Answer: 

This is not a violation because you are not conditioning the loan on the use of an EFT, but rather are providing an incentive through the rate for the manner of repayment. If you denied the loan because they wouldn't pay via EFT you would have a violation.

First published on BankersOnline.com 5/16/05

First published on 05/16/2005

Filed under: 
Technology
Filed under technology as: 
EFT

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