What is the primary purpose of the Truth-in-Lending Act?

The primary purpose of the Truth-in-Lending Act (TILA) is to ensure that creditors provide consumers with clear and conspicuous disclosures regarding the terms and conditions of credit. TILA was enacted to protect consumers by requiring lenders to disclose important information about the cost of borrowing, such as the annual percentage rate (APR), terms of the loan, and any fees that may be associated with the credit. This transparency allows consumers to make informed decisions by comparing different credit options effectively.

By providing this clarity, the Act helps to foster an environment where consumers are aware of their financial commitments and can better understand the implications of taking on debt. This is vital in preventing misunderstandings and potential abuse in lending practices, ensuring that consumers are fully aware of what they are agreeing to when entering into credit agreements.