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

The primary purpose of the Truth in Lending Act (TILA) is to ensure that all loan costs are adequately disclosed. TILA was enacted to promote informed use of consumer credit by requiring clear and consistent disclosure of the terms and costs associated with borrowing. This transparency allows consumers to understand their obligations and the costs they will incur, which helps them make informed decisions when comparing different credit options.

By mandating disclosures such as the annual percentage rate (APR), total finance charges, and other loan terms, TILA plays a crucial role in protecting consumers from hidden fees and misleading lending practices. It empowers borrowers by ensuring they have the necessary information upfront about the cost of borrowing, making it a cornerstone of consumer protection in financial transactions.