What constitutes a consumer loan under Regulation Z?

A consumer loan under Regulation Z is defined as a loan primarily for personal, family, or household purposes. This classification means that the loan must be intended for individual use rather than for business or commercial purposes. Regulation Z is part of the Truth in Lending Act, which aims to ensure that consumers are informed about the costs of credit and have the knowledge necessary to make informed borrowing decisions.

The reason option B is correct lies in the scope of the types of loans that Regulation Z encompasses. It specifically targets loans that benefit individual consumers in their everyday lives, like personal loans, auto loans, or loans for educational expenses, which all fall under the umbrella of consumer loans.

The other options present limitations or specifications that do not reflect the broader definition found in Regulation Z. A loan for a home purchase, for instance, might not qualify as a consumer loan in this context if it’s for investment purposes or if it exceeds a certain amount exempted under the regulation.

The stipulation regarding loans under $25,000 and loans secured only by real property also does not align with the definition of consumer loans as per Regulation Z. The regulation is not limited to certain amounts or security types, emphasizing the importance of the purpose behind the loan rather than these other factors.