How does NJAC limit how lenders can charge application fees?

• A. It allows unlimited fees for processing
• B. It forbids charging application fees altogether
• C. It does not allow them to charge the fee as a percentage of the loan
• D. It permits fees only if they are clearly stated

Answer: (C)

The New Jersey Administrative Code (NJAC) places restrictions on how lenders can charge application fees, particularly by disallowing them from being expressed as a percentage of the loan amount. This ensures that borrowers are aware of the actual costs associated with the application process without the fee being obscured as a percentage that varies based on the loan amount.

This regulation is aimed at promoting transparency in the lending process, allowing borrowers to understand upfront what they will be responsible for paying regardless of the size of their loan. By eliminating the potential for fees that fluctuate with loan amounts, the NJAC seeks to protect consumers from unexpected charges that can disproportionately affect those seeking smaller loans.