The Truth in Lending Act (“TILA”) is a federal law that requires lenders to provide certain standardized information to borrowers prior to extending many types of consumer credit. 15 U.S.C. § 1601 et seq. TILA was implemented by Regulation Z, 12 CFR 1026. The information provided to borrowers includes, but is not limited to:
- The annual percentage rate (“APR”);
- The term of the loan;
- The cost of the loan; and
- The borrowers’ rights, including the right of rescission.
TILA is intended to ensure that credit terms, like the ones mentioned above, are disclosed in a meaningful way so that consumers can compare terms more readily and make knowledgeable decisions about loans and other types of credit. TILA applies to “closed-end credit”, including car loans and home mortgages, and “open-end credit” such as a credit card or a home equity line of credit.
Lenders are required to include these disclosures on documents given to borrowers. You should always review documents given to you by a lender prior to signing any documentation. These documents are a consumer’s best resource to ensure that you understand the terms of the extension of credit and that you receive the best possible rates and terms.
The Consumer Financial Protection Bureau (“CFPB”) is responsible for implementation and enforcement of TILA. The CFPB has issued guidance regarding TILA disclosures, available at www.consumerfinance.gov/ask-cfpb/what-is-a-truth-in-lending-disclosure-when-do-i-get-to-see-it-en-787/. Additionally, the CFPB has published information on the laws and regulations related to TILA, available at files.consumerfinance.gov/f/201503_cfpb_truth-in-lending-act.pdf.
