What is the Truth in Lending Act?
The Truth in Lending Act (TILA) is a federal law that was passed in 1968 in order to protect consumers from deceptive lending practices by requiring creditors to provide full disclosure about the terms of a loan, including the interest rate, the annual percentage rate (APR), the total finance charges, and the total amount of the loan. The law applies to consumer credit transactions, including mortgages, auto loans, and credit cards. In North Carolina, the Consumer Finance Act of 2013 specifically outlines the requirements of the TILA and applies to transactions where the lender is a bank, credit union, or other type of financial institution. The TILA prevents lenders from making false or misleading statements about the terms of a loan and requires lenders to accurately disclose the annual percentage rate, the total finance charges, and the total amount of the loan. The law also requires lenders to clearly explain the loan costs, risks, and payment terms, and to provide borrowers with the right to cancel or rescind the loan within three days. Additionally, the TILA provides the right to dispute certain credit transactions and the right to sue lenders for violating the rules of the law. In North Carolina, the Consumer Finance Act of 2013 also specifies that if charges or fees are imposed after the loan agreement is signed, the lender must provide the borrower with a written explanation of the additional fees. Additionally, lenders must abide by the Fair Debt Collection Practices Act, which prohibits harassment, abuse, and deceptive practices in the collection of debts. The Truth in Lending Act provides valuable consumer protections for borrowers in North Carolina, protecting them from lenders who are not transparent about the terms of the loan.
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