By Kat DeLong
When you sign up for a new credit card or buy a house, you are faced with pages and pages of small print - do you really read all of it? The answer is probably "no." Even though you may not go through the whole stack of paper as you sign here and initial there, some fine print should not get overlooked. Thanks to the Truth in Lending Act (TILA), the loan documents must contain the vital information you need
Originally passed by congress in 1968, the TILA is a uniform way for lenders to present the terms of a consumer loan so that borrowers can make informed choices and compare costs equally between lenders. This act covers both "closed ended" loans, such as a car loan or mortgage that you pay back over a specified period of time, and "open ended" loans, such as credit cards.
While the Truth in Lending Act covers necessary information, these five material disclosures must always be included:
Recent changes to the TILA address some discrepancies found in so-called "higher-priced mortgage loans." These changes strengthened parts of the TILA relating to practices viewed as unfair or deceptive. They offer key protection for borrowers including ending the practice of lending money without considering the borrower's income or ability to repay the loan and put conditions on prepayment penalties.
Misunderstandings between borrowers and lenders can be handled quickly and easily, but contact an attorney if your rights under the TILA have been violated. Learning a little about the Truth in Lending Act now can save you a lot of frustration - not to mention money - in the long run.