The Truth in Lending Act (TILA) protects consumers by requiring creditors to disclose certain information about finance charges, annual percentage rates, payment amount, and fees that may be charged to the consumer.
What Kind Of Businesses Are Regulated?
TILA regulates most creditors. Common examples of creditors regulated by this law include banks, credit unions, finance companies offering car loans, credit card companies, and home mortgage lenders.
When Does The Law Apply?
When these companies make a loan, it is likely that they are regulated by TILA. TILA covers most types of credit transactions including car purchases and leases, home mortgages and refinancing, personal loans and lines of credit, credit cards, private student loans and payday loans.
If a creditor extends a loan to a consumer who is buying a new car, it is required to properly disclose, among other things, the APR (annual percentage rate) and finance charge of the loan. This allows the consumer to better understand the terms of the loan and make an informed decision when comparing it to other loans. These requirements apply to other common loans such as personal loans, home loans, etc…