Definition
The Truth in Lending Act, or TILA, is a federal law that protects consumers by requiring lenders to clearly disclose all the terms and costs of a loan. This prevents predatory lending practices.
Understanding TILA's Role
The Truth in Lending Act (TILA) ensures that lenders provide clear information about loan terms. In simple terms, TILA requires lenders to disclose the annual percentage rate (APR) and other key details. Example: If a loan has a $100,000 principal and a 5% APR, TILA ensures this rate is clearly communicated. It's not a guarantee of loan approval or a promise of the best rate. TILA's focus is on transparency, helping borrowers understand what they're signing. It doesn't dictate loan terms themselves.
