There are dozens of different laws on the books today, which are designed to protect consumers from a financial point of view. These laws cover things like credit reporting, debt collection, and legal types of communication between individuals and companies. One of these laws is the Truth in Lending Act, or TILA, which was passed in 1968, in order to ensure that people are treated fairly by lenders, and are given information about the true cost of credit. Obviously, the financial marketplace has changed dramatically since this law’s inception, so there have been modifications made over time to address modern demands.

Today, the TILA includes other sub-laws, working under the umbrella of transparent and ethical lending. These are:

• Fair Credit Billing Act
• Fair Credit and Charge Card Disclosure Act
• Home Equity Loan Consumer Protection Act
• Home Ownership and Equity Protection Act

Under TILA, lenders like banks, credit companies, and mortgage companies are required to disclose information that impacts consumers’ finances and potential credit ratings. These include things like interest rates, adjustments, penalties, and other costs that many people may not be automatically aware of. All of these fees are included in the idea of the “true cost of credit,” helping people better understand the realities of loans, especially large ones like mortgages.

Many people have gotten into terrible financial conditions, due to dishonest or predatory lending, and the TILA is designed to help those people. Whenever you are considering a loan of any kind, from credit cards to car loans, it’s important to get clear information about your financial responsibilities, including:

• Your precise line of credit/available capital
• Interest rates, and if/how they will adjust over time
• Penalties for missed, late, or short payments
• Potential outcomes for different payment amounts, including interest-only options, paying more each month, and paying off early
• Additional fees or charges associated with brokerage, taxes, etc…
• Options for life circumstances like financial hardship and disability/health issues
• The expected life of the loan and total costs to you
• What benefits you can expect from the lender

In most cases, all of these things are outlined in the lending contract that consumers sign when accepting a line of credit. However, sometimes they’re not clear, and most people don’t take the time to read their entire contracts, instead counting on their broker or representative to honestly represent the terms of the agreement…which we should all be able to count on!

In the end, you always have the right to legal assistance from some of the most experienced consumer rights attorneys in Los Angeles. If you need help, or suspect a violation of the TILA, reach out to us at Martin & Bontrager for your free consultation!