What is the Truth in Lending Act?
The Truth in Lending Act (TILA) is a federal law that was enacted in 1968 as a consumer protection measure. It requires lenders to disclose the terms of credit, including the total cost of the loan and the interest rate. The Act also requires lenders to clear up any misunderstandings that consumers may have about their loan or credit agreement. In Delaware, TILA applies to a variety of credit products, including credit cards, home equity loans, and auto loans. Lenders must provide the required information in writing, which must be clear and upfront. This includes the annual percentage rate (APR), the finance charge, and any fees associated with the loan. The lender must also disclose if the interest rate on the loan can change, such as if it is a variable-rate loan. TILA also gives consumers the right to cancel certain credit transactions within three days of signing for them. This is known as the “right of rescission.” Additionally, the Act prohibits certain unfair or deceptive practices in the consumer credit market, such as deceptive advertising, extending credit without regard to a borrower’s ability to repay, and charging excessive late fees. By providing transparency and accuracy in consumer credit transactions, the Truth in Lending Act helps to protect Delaware consumers from any possible abuses in the credit market. The law helps to ensure that consumers have the information they need to make informed decisions about their credit transactions.
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