What is the primary purpose of the Truth in Lending Act (TILA)?

The primary purpose of the Truth in Lending Act (TILA) is to promote informed use of consumer credit by requiring clear disclosure of key terms of the lending arrangement. This includes the total cost of borrowing, the annual percentage rate (APR), and other important financial terms associated with credit offers. By mandating these disclosures, the Act helps consumers understand the true cost of loans and compares the borrowing options available to them, ensuring that borrowers can make better-informed decisions regarding their financial commitments.

This clear disclosure requirement is critical in preventing misleading practices that could ambush consumers with higher costs that they may not fully understand. By emphasizing transparency, TILA aims to foster trust and fairness in the lending process.