What is the Truth in Lending Act (TILA)?

The Truth in Lending Act is a 1968 federal law designed to promote better understanding of consumer credit by requiring disclosures about credit terms and costs. The law requires lenders to disclose credit terms in an easily understood manner so consumers can comparison-shop for interest rates and loan conditions. Notably, the law introduced the annual percentage rate (APR) calculation mandated for all consumer lenders.

Under TILA, lenders must provide a disclosure statement that includes information about the amount of the loan, the APR, finance charges, a payment schedule, and the total repayment amount due over the lifetime of a loan.

From 1968 to 2011, the Federal Reserve Board had the authority to implement TILA. After 2011, that responsibility was transferred to the Consumer Financial Protection Bureau (CFPB).

The law is codified at 15 U.S.C. Ch. 41 §1601. Its implementing regulations are known as “Regulation Z.”