Deal Pack Blog
What is TILA?
The Truth in Lending Act (TILA) is United States federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost. It standardizes the manner in which costs associated with borrowing are calculated and disclosed, hence protecting consumers against inaccurate and unfair credit billing practices.
The Truth in Lending Act was originally Title I of the Consumer Credit Protection Act, Pub L. 90-321, 82 Statute 146 which was enacted June 29, 1968. Specific requirements imposed by TILA are found in Regulation Z. From TILA’s inception, the authority to implement the statute by issuing regulations was given to the Federal Reserve Board. TILA’s general rule making authority was transferred to the Consumer Financial Protection Bureau on July 21, 2011.
Retail installment sale contracts produced for financed automobile sales disclose the calculated annual percentage rate, amount financed, total of payments, total down payment and the total sales price in the Truth in Lending section. The contract also provides an itemization of the amount financed and late payment penalties.
A lender will not be held accountable for truth in lending violations if the lender corrects the mistake within sixty days of the discovery, unless the borrower has already filed a lawsuit. If the error was completely unintentional, the lender might not be held responsible. However, the lenders, not the consumers, bear the weight of proving beyond a doubt that the violation was, in fact, unintentional. The lender would also have to prove that the mistake was made in spite of compliance with procedures that would usually avoid such an error. Mistakes such as computer error, clerical error, miscalculations, and printing errors could be considered a bonafide mistake.