What is the primary function of the Truth-In-Lending Act?

The primary function of the Truth-In-Lending Act (TILA) is to ensure transparency in credit costs. This federal law was enacted to promote informed use of consumer credit by requiring disclosures about its terms and costs. It mandates that lenders provide borrowers with clear and concise information regarding the cost of credit, including the annual percentage rate (APR), the total loan amount, and any applicable fees. By requiring these disclosures, TILA helps consumers understand the true cost of borrowing, facilitating better comparisons between different loan offers and helping them make informed financial decisions.

This transparency ultimately aims to prevent deceptive lending practices and ensure that consumers are fully aware of their financial obligations when entering into a loan agreement.