Under TILA, what must lenders disclose about variable-rate loans?

The requirement for lenders to disclose the terms of variability and potential payment increases for variable-rate loans is crucial for ensuring transparency and protecting borrowers. This disclosure allows the borrower to understand how the interest rate can change over time and the impact it can have on their repayment obligations. By detailing how often the rate can adjust, the index to which the rate is tied, and the potential caps on adjustments, lenders provide borrowers with essential information to make informed decisions about the loan. This is particularly important in the context of variable-rate loans, where payments can increase significantly due to changes in the interest rate, potentially leading to affordability issues for the borrower.

In contrast, other options do not align with TILA's requirements for disclosures regarding variable-rate loans. Fixed payment amounts for the entire loan term are not applicable for variable-rate loans, as those payments can fluctuate. Similarly, simply disclosing the interest rate and loan length does not convey the essential details about variability that could affect the borrower’s financial planning. Additionally, the credit score of the borrower is not relevant in the context of specific loan features and payment variability, as it relates more to creditworthiness than to the terms of the loan itself.