What is the Truth in Lending Act?

The Truth in Lending Act (TILA) is a federal law passed in 1968 to ensure that consumers in Kansas and elsewhere are given accurate and complete information about consumer credit, including terms of credit and costs associated with credit. Under the law, lenders must be clear and honest in their disclosures and use easy-to-understand terms. TILA requires lenders to provide borrowers with two different forms of documentation, a Truth in Lending disclosure statement and a finance charge disclosure, so borrowers know the terms, costs, and risks of taking on credit. The Truth in Lending disclosure statement must contain the APR, finance charge, total payments, total of payments to be made, list of fees, and other information related to the loan. The finance charge disclosure must contain the total finance charge, which covers interest, service or transaction fees, and other charges. The purpose of TILA is to ensure transparency and fairness in the lending process and to provide consumers with adequate information so that they can make informed decisions about debt. It also provides consumers with legal protections, including the right to cancel certain loans in certain circumstances. Lenders who violate TILA can be subject to civil penalties, including fines and the return of unpaid finance charges and interest.

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What is the Truth in Lending Act?

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