Are you aware of the Truth in Lending Act (TILA)? It is the federal law that was passed in the year of 1968 in an attempt to make sure that the people who are interested in lending market are provided with the fair and reasonable platform.
It was introduced in order to ensure that the people are served reasonably well in the lending market along with the perfect and complete information and knowledge of the cost, terms, and conditions of credit. The truth in the lending act here seems to be the requirement from the lenders for the revealing credit terms and conditions.
This is made compulsory in order to allow and enable customers to understand the terms and conditions with interest rates easily. Consequently, consumers would be able to conduct a comparison of the different rates of interest rates available at the marketplace which would lead to the better and cost-effective decisions on the part of an individual.
It is the need that every lender must see the truth in lending act here by revealing the statement which should consists the information related to the amount of the granted and extended loan, annual percentage rate (APR), financial fees (application amount, late fees, and prepayment fees) and the mode and installment of fees, and the total payment of the amount spread over the specific period of time.
TILA has to make sure that all the creditors and lenders of the loan must use the standard terms and denotation of the rates offered to the consumers in the shape of individuals. Although TILA is 5-decade old concept and understanding, it still has the relevance in today’s digital era.
It is not something that prevents or imposes restrictions on banks and financial institutions pertaining to the amount of interest that can be charged or not. It is also not to influence the decision of the lenders to extend a loan to the customers or not.
But it is something which makes it mandatory for the creditors to reveal the necessary information about the charges and fees attached to the loan and extended amount.
History of TILA:
Prior to the launched and introduction of TILA Act, there seems to be a lot of difficulties for the customers to avail the information and make a comparison about the rates of loan and terms and conditions offered by the creditors of the lending marketplace.
As the matter of fact, information related to rates and terms and conditions were not standardized needed to make the effective comparison so that the better decision can be made regarding loan requirement. Before TILA, It was quite impossible for the customers to compare the different credit terms and conditions and comprehend the distinctive loan offers.
In last, TILA requires and ensure the customer protections against the improper and unfair attempts on part of the lenders or the creditors prevailing in the lending marketplace. This way, customer tend to have secure platform whenever they have to seek loans.