TILA or the “Truth in Lending Act” is a federal law that was passed in 1969. This is to safeguard businesses and private individuals of receiving fair treatment from lenders. At the same time, to have transparency of the true cost of credit. TILA demands lenders in disclosing credit terms in an easy to understand manner. This way, consumers can perform a comparison of conditions and interest rates.
This is something that every lender should know. And in the event that you have opted to apply for Zebra loans from New Zealand, they would happily oblige on your request for document transparency.
Lenders Warning! This is what Should Be Disclosed to Clients
Truth in Lending should be provided by the lenders. It is a disclosure statement which includes the following information:
- Details regarding the loan amount
- The APR or the Annual Percentage Rate
- Finance charges including late charges, prepayment penalties or application fees
- Payment schedule and;
- Total amount to be repaid throughout the lifetime of loan
TILA is outlining the rules that will be applicable to closed-end accounts similar to auto loans or mortgage loans and other open-ended accounts similar to credit cards. It doesn’t put any restrictions on banks no matter how much interest they like to charge or whether they have to grant loan. However, it does require lenders in disclosing information that’s related to fees and charges of the loan.
Consumers who refinance for mortgage loans have “right of rescission”. This is basically a 3-day cooling period wherein they can cancel their loan without losing any amount they have released.
What about Regulation Z?
This is actually a Federal Reserve Board rule that’s requiring the lenders to disclose the actual cost of credit in writing right before it is borrowed. This normally includes sum of money loaned (spelled out), rate of interests, loan terms and fees and the finance charges.
Simply speaking, Regulation Z is another term to describe TILA. Basically, these two are interchangeably used in the industry.
Both of these have been amended a number of times since 1968 that it’ll take a book in describing all modifications. The first update came in the 70s and has prohibited unsolicited credit cards. However, this was only the beginning.
Among the major amendments was focused on CFPB or Consumer Financial Protection Bureau rulemaking authority which is under TILA as well. CFPB used its authority in implementing rules for the ability-to-repay requirements for home loans, fees and points limits that is applicable to qualified mortgages as well as refined loan originator compensation rules.