Truth in Lending Act

Consumer Protection for Borrowing Money

Overview
The Truth in Lending Act, or TILA, also known as regulation Z, requires lenders todisclose information about all charges and fees associated with a loan. This 1968
federal law was created to promote honesty and clarity by requiring lenders todisclose terms and costs of consumer credit. The TILA standardized the process of
how borrowing costs are calculated and disclosed, making it easier for consumers tocompare loans and credit costs with various lenders.
TILA disclosures include the number of payments, the monthly payment, late fees,
whether a borrower can prepay the loan without penalty and other important terms. TILA
disclosures is often provided as part of the loan contract, so the borrower may be given
the entire contract for review when the TILA is requested. Borrowers should always
receive and review the TILA disclosure page in detail before signing any loan contactthat obligates repayment.

What Does the TILA Do?
THE TILA:ÌÌThe Office of Financial
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Discloses finance charges, fees and costs of credit before consumers takeout credit and have a legal obligation to repay

DISCLOSURE STATEMENTS UNDER THE TILA WILL PROVIDE THE FOLLOWINGINFORMATION ABOUT THE COSTS OF LOANS AND CREDIT:ÌÌÌ

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What Information Do TILA Disclosure Statements Provide?

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Borrowing costs: The cost of credit is expressed as a yearly percentage rate
known as the annual percentage rate, or APR.
Finance charges: Finance charges are the cost of credit shown as a dollar
amount. They are made up of the total amount of interest and fees paid overthe life of loan with on-time payments.
Amount financed: The amount financed is the dollar amount of credit
provided to the borrower, which is normally the amount borrowed.
Total of payments: The total of payments is the sum of all payments theborrower will have paid at the end of the loan, which includes the repaymentof the principle plus all finance charges on the loan.

What Is Disclosed Under the TILA?
THE TILA DISCLOSES:ÌLate payment feesÌInterest rate increases

ÌService charges and fees

What Is Not Covered Under TILA?
THE TILA DOES NOT COVER:
ÌStudent loansÌLoans over $25,000 made for purposes other than housingÌ

Business loans (The TILA only protects consumer loans and credit.)

Summary
Purchasing a home, vehicle or other assets with credit and loans can greatly impact
your financial security. Be money smart by carefully reviewing TILA disclosures toobtain the best financial option for your borrowing needs. For additional assistance,
make an appointment to receive no-cost, personal support from an accredited personal
financial manager or counselor at your nearest Family Center. Visit https://installations.
militaryonesource.mil to locate one near you.

Additional Resources:Ì

https://www.occ.treas.govÌ

https://www.consumerfinance.gov