Truth-in-Lending Act


Also found in: Legal.

Consumer Credit Protection Act of 1968

Legislation in the United States requiring lenders to disclose to potential borrowers all terms of loans, including, but not limited to, the interest rates, applicable fees, and the length of loans. The Act also allows consumers to cancel some credit transactions that require a lien to be placed on the consumer's primary residence. For the most part, the Act does not place limits on the fees lenders may charge, but instead requires transparency. It is also called the Truth in Lending Act.

Truth-in-Lending Act.

The Truth-in-Lending Act requires every lender to provide a complete and clear disclosure of the key terms of any lending or leasing arrangement, plus a statement of all costs, before the agreement is finalized.

The statement must include the finance charges stated in dollars and as an annual percentage rate (APR).

For most loans, it must also include the total of the principal amount being financed, all the interest, fees, service charges, points, credit-related insurance premiums, payment due date and terms, and any other charges.

The consumer lending section of the Act, which was first passed in 1968 and then simplified and reformed in 1980, is also known as Regulation Z. The consumer leasing section is known as Regulation M.