What federal law requires lenders to disclose the cost of credit to consumers?

The Truth in Lending Act is the federal law that mandates lenders to disclose the cost of credit to consumers. This legislation was enacted to promote the informed use of credit by requiring clear and conspicuous disclosure of key terms associated with borrowing. It requires lenders to provide detailed information regarding interest rates, fees, and the total cost of credit, allowing consumers to make more informed decisions about borrowing.

This law aims to prevent misunderstandings about the terms of credit and enables consumers to compare the costs of credit between different lenders more easily. This transparency is crucial in protecting consumers from deceptive lending practices and ensuring fair access to credit.

In contrast, the Fair Housing Act is focused on preventing discrimination in housing; the Equal Credit Opportunity Act prohibits discrimination in lending but does not specifically require cost disclosures; and the Home Mortgage Disclosure Act aims to provide the public with information about mortgage lending patterns but does not directly mandate cost disclosures.