Truth in Lending Act Lawyers

What Must a Creditor Tell Me when I Am Applying for a Loan or Credit Card?

The Truth in Lending Act provides guidelines for a creditor as to what disclosures must be made to a consumer applying for a loan or credit card. The Act applies to a creditor when four requirements are met:

• Credit is offered to consumers
• Credit is offered or extended regularly (more than 25 times a year)
• The credit is mostly for household, family, and personal purposes
• The credit is subject to a finance charge or payable in more than 4 installments by written agreement

The Act does not apply to:

• Creditors who extend credit mostly for business, commercial, agricultural, or organizational purposes
• Student loan programs

Close-ended Credit Transactions

Examples of close-ended credit transactions include Sales Credit, and Loans. The following disclosures must be made by the creditor in this type of transaction:

• Identity of the creditor
• Amount financed
• Itemization of amount financed
• Payment schedule
• APR, including applicable variable-rate disclosures
• Finance charge
• If applicable: total sales cost; insurance; reference to contract; demand feature; security interest; and required deposit

Open-ended Credit Transactions

Examples of open-ended credit transactions include Bank and Gas Credit Cards, Stores¿ Revolving Charge Accounts, and Cash-checking Accounts. The following disclosures must be made by the creditor in this type of transaction:

• APR, including applicable variable-rate disclosures
• Statement of billing rights
• Amount/method for determining membership or participation fees
• Method for determining finance charge and balance upon which finance charge is imposed
• Security interests if applicable to transaction

What Happens if the Creditor Violates the Act?

Creditors are liable for not meeting all the disclosure requirements, even if the consumer is not harmed by the disclosure. There are two exceptions:

• The error is corrected within 60 days of discovery by the creditor (not by the consumer)
• The failure to disclose is a genuinely unintentional error

What Should I Do if My Creditor Violated the Act and Did Nothing to Correct the Error?

If your creditor has not made sufficient disclosures, you may be entitled to actual or statutory money damages. You may want to consult an attorney to be advised of your rights and options in the particular type of credit transaction where the dispute arose.