What must lenders disclose to borrowers regarding their rights under Regulation Z?

The correct answer highlights an important consumer protection feature within Regulation Z. Lenders are required to disclose that borrowers have a three-day right to cancel certain loans, particularly under the Truth in Lending Act (TILA), which is part of Regulation Z. This right applies specifically to refinancing transactions and home equity lines of credit, among others, allowing consumers to change their minds after entering into a loan agreement. This disclosure is crucial as it empowers borrowers, giving them time to reconsider their financial commitments and ensuring they fully understand the implications of their borrowing decisions.

This provision includes the necessity for lenders to inform borrowers about their ability to cancel the loan without incurring penalties within that three-day timeframe, contributing to consumer protection in financial transactions. Awareness of this right is critical for borrowers to make informed decisions and avoid potential financial pitfalls associated with rushed commitments.

While the other choices may touch on relevant considerations in the lending process, they do not specifically reflect the legal disclosures mandated by Regulation Z regarding consumer rights.