What does the Truth in Lending Act (TILA) require lenders to do?

The Truth in Lending Act (TILA) primarily aims to promote informed consumer decision-making by mandating that lenders fully disclose the terms and costs associated with borrowing. This includes clear information regarding the annual percentage rate (APR), finance charges, total costs of the loan, and payment terms. By requiring these disclosures, TILA helps consumers understand the financial implications of a loan, allowing them to compare options and make better-informed choices. This transparency is fundamental in protecting consumers against unfair lending practices.

Other options may touch on important aspects of credit and lending, but they do not specifically capture the primary requirement of TILA. For instance, ensuring equal access to credit is more closely related to anti-discrimination laws than TILA’s purpose. Providing mortgage insurance is a requirement that might come under different government programs or lender policies rather than TILA. Evaluating a borrower's credit score is a common practice in lending but is not dictated by TILA. The focus of TILA remains squarely on the disclosure of important loan information to empower consumers.