Under Regulation Z, what must lenders provide to borrowers when charging a fee?

The requirement for lenders to provide clear disclosure of any fees before they are charged is a critical aspect of Regulation Z, which serves the purpose of ensuring transparency and protecting consumers in the lending process. This regulation mandates that borrowers receive detailed information about the costs associated with their loans upfront, allowing them to make informed decisions.

By stipulating that fee disclosures must occur prior to the assessment of any fees, Regulation Z helps borrowers understand the total cost of credit, including interest rates and various fees that might be involved in obtaining the loan. This promotes fair lending practices and prevents any unexpected costs from surfacing after the loan has been issued, which can lead to financial stress for borrowers.

The other options do not align with the principles of Regulation Z. Providing a fee structure in the loan agreement may not ensure that the borrower has prior knowledge of fees if they are not disclosed clearly enough. Disclosure of fees after the loan is issued violates the regulation’s intent to provide upfront clarity. Similarly, a mere list of potential fees does not fulfill the requirement for clear and specific disclosure of fees that will actually be charged in the borrowing process.