Which regulation relates to the disclosure of the cost of credit in consumer loans?

The Truth in Lending Act (TILA) is the regulation that specifically addresses the disclosure of the cost of credit in consumer loans. This legislation aims to promote informed use of consumer credit by requiring clear and conspicuous disclosure of terms and costs associated with borrowing. TILA mandates that lenders provide borrowers with key information about the annual percentage rate (APR), finance charges, total payments, and terms of the loan, allowing consumers to understand how much credit will cost them over time.

The act is intended to protect consumers from unfair lending practices and misrepresentations, ensuring that they have sufficient information to make informed financial decisions. By requiring these disclosures, TILA empowers consumers to compare credit offers more easily and understand their financial obligations, fostering transparency in lending practices.