What is the main goal of the Truth in Lending Act (TILA)?

The primary purpose of the Truth in Lending Act (TILA) is to ensure transparency in lending by requiring lenders to disclose the terms and costs of credit clearly and conspicuously. TILA aims to provide borrowers with the necessary information to make informed decisions about their borrowing options, allowing them to compare different credit offers easily. This includes disclosing the annual percentage rate (APR), payment terms, and all associated costs of the loan, which helps mitigate misunderstandings between borrowers and lenders.

By mandating detailed and standardized disclosures, TILA helps standardize the way credit terms are presented, promoting fair lending practices and fostering trust between consumers and financial institutions. This consumer protection measure is critical in an environment where borrowers often face complex loan agreements and potential hidden costs.