Truth in Lending Act (TILA)
Definition - What does Truth in Lending Act (TILA) mean?
The Truth in Lending Act is a law that originated from the Federal Reserve in 1968, which is designed to help prevent consumers from being uninformed when they make consumer credit decisions. This law states that lenders cannot market deals to the general public that are designed only for preferred borrowers, that lending ads must contain none or all of the terms of credit deals, and that the cost of the credit must be clearly presented to the consumer if the debt is to be repaid in more than four payments.
Justipedia explains Truth in Lending Act (TILA)
The Truth in Lending Act really serves to protect people from unknowingly getting into hazardous credit situations where they are paying exorbitant interest rates, or are otherwise unaware of different aspects of the credit deal. It basically adds a lot of transparency and clarity to credit transactions. So, under the Truth in Lending Act, a consumer has a much better chance of being fully informed that a credit card may charge a higher interest rate, etc.