Truth In Lending Act
The Truth in Lending Act is first and foremost a statute of disclosure. TILA is aimed at ensuring consumers have meaningful facts, uniformly categorized, about competing offers of credit so that they can make informed choices about credit.The act itself provides substantive requirements, but the "meat" of the technical requirements are found in the regulations promulgated under the Act, collectively referred to as "Regulation Z."
TILA and Regulation Z require the yield of any credit transaction (expressed in Annual Percentage Rate or APR, and including all discounts and origination fees) to be disclosed to the consumer prior to the consumer's acceptance of the terms. These provisions are designed to prevent hidden fees from being inserted into a credit transaction, drastically raising the cost of the credit without proper disclosure to the consumer.
The provisions of the act and Regulation Z are fairly complex when taken together - a fact illustrated by the 135-page compliance manual published by the Office of the Comptroller of the Currency. However, it is a consumer protection statute, and as such offers remedies for consumers who have been harmed by violations of its requirements. Among other remedies, consumers enjoy various rights of rescission - or termination of the agreement - in some cases up to three years past acceptance. (Generally, however, the right to rescind most credit transactions expires 3 days after signing the agreement.)
For More Information
- Text of TILA
- Text of Regulation Z
- Wikipedia article - TILA
- Comptroller's Handbook - Truth in Lending (PDF)
- FTC's Credit for Consumers website
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