Legal Definitions - Truth in Lending Act (TILA)

The Truth in Lending Act (TILA) is a law that protects consumers from predatory lending practices. It was created in 1968 because lenders were using confusing language and forms to trick people into taking out loans they couldn't afford. The TILA requires lenders to use a clear and uniform system of disclosures and terminology when offering loans like credit cards or mortgages.

For example, if you apply for a credit card, the lender must tell you the annual percentage rate (APR) and how much you will have to pay each month. They must also explain any fees or penalties that may apply. This way, you can make an informed decision about whether or not to accept the loan.

The TILA also limits the amount of late fees that lenders can charge. This helps to prevent borrowers from getting into even more debt if they are unable to make their payments on time.

Overall, the TILA is an important law that helps to protect consumers from being taken advantage of by lenders. By requiring lenders to be transparent about the terms and conditions of their loans, the TILA ensures that borrowers can make informed decisions about their finances.