Truth+in+Lending+Act

Truth in Lending Act. In 1968, the government required all banks and loan agencies to provide the APR (interest percentage), terms, and penalties involved in a loan. This Act serves a crucial function in protecting the interest of any lendee. Clear disclosure of the arrangement terms ensures that the consumer (lendee) knows what they are getting into, and whether it will be in their best interests to take out this loan. They will understand the exact financial state of their loan, and therefore be sure if they can afford it, maintain a regular payment schedule, and cope with any penalties or rate adjustments. The Truth in Lending Act ensures that the loan system cannot be abused.

How does the Truth in Lending Act protect consumers? -Velcoff A. It requires lenders to openly state the terms and conditions of a loan. B. It insures a consumer's investment for up to $250,000. C. It allows the lending agency to reposess consumers' collateral as payment. D. It automatically bankrupts the lender when the lendee defaults.