Under the Consumer Protection Code, 2012, if a lender intends to impose a charge in respect of arranging a loan to a consumer, when must the lender inform the individual of any such charge?

• A. When the loan is approved.
• B. Prior to the consumer signing the loan application form.
• C. It must be highlighted in the loan offer.
• D. A lender is not allowed impose a charge for arranging a loan.

Answer: (B)

Disclosing any charge for arranging a loan before the consumer signs the application form is required so the borrower can make an informed decision. The Consumer Protection Code 2012 mandates that all fees and charges linked to credit—especially arranging charges—be clearly disclosed in writing before the consumer commits to the loan. If the information only appears later, such as at approval or only in the loan offer, the consumer would be agreeing to terms without full awareness of the costs.

Therefore, the lender must inform the individual of any such charge prior to signing the loan application form. It's allowed to charge if the cost is clearly disclosed in advance; simply stating it later or waiting until after approval would not meet the disclosure requirement.