Truth in Lending Act (TILA): The Truth in Lending Act is a Federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on
- what credit will cost the borrowers,
- when charges will be imposed, and
- what the borrower's rights are as a consumer.
The Federal Truth in Lending Act is intended to ensure that credit terms are disclosed in a meaningful way so consumers can compare credit terms more readily and knowledgeably. Before its enactment, consumers were faced with a bewildering array of credit terms and rates. It was difficult to compare loans because they were seldom presented in the same format. Now, all creditors must use the same credit terminology and expressions of rates.
See also the Indiana Department of Financial Institution's webpage for Questions and Answers About Federal Truth in Lending Disclosures.