The Truth in Lending Act (TILA) is a United States federal law that is drawn to protect and promote the interest and goods of both of the parties involved in a credit contract. This law mainly requires in its attempt for protection a clear disclosure of all the informations pertaining to the lending agreement and all costs. Informations such as lending contract duration, penalties, annual interest, liquidity and others that pertain to the credit contract less relevant or not must be clearly discussed and disclosed between the involved parties before the start of the implementation of the contract.
This law thus, generally prevents present and future ambiguities brought by misunderstandings and/or misinterpretations caused by the technical key terms in the contract. In addition, this law draws out the need for a written or concrete regulation embodying the agreement in the contract, which is subdivided in several parts and appendices to specifically address each information.
Lending and credit are economic tools that are relevant to the society thus, they are significantly relevant in the aspect of handling economic obligations and expenses. To continuously promote this significance and negate the adverse aspect of credit, the Truth in Lending Act must be duly implemented and followed by all of the involved parties in drawing out a credit contract agreement.
Moore, Donna (2004). The Truth in Lending Act. Training Pro, USA. ISBN-10: 0976047330.