What does the Truth in Lending Act primarily aim to address?

The Truth in Lending Act (TILA) primarily aims to address the disclosure of credit costs to consumers. TILA was enacted to ensure that consumers are provided with clear, understandable information about the terms and costs associated with credit. This includes disclosing the annual percentage rate (APR), fees, and other charges that can affect the total cost of borrowing. By mandating these disclosures, the Act empowers consumers to make informed decisions regarding credit products, thereby promoting transparency and fostering a more competitive credit market.

The focus of TILA on informing consumers about credit costs helps protect them from deceptive lending practices and encourages borrowers to shop around for the best credit terms. This, in turn, supports informed financial choices and promotes responsible borrowing behaviors. It is essential for compliance professionals to understand these disclosures to ensure that lending institutions adhere to TILA requirements effectively.