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When Is a Creditor Required to Disclose Information?

The Truth in Lending Act provides requires that creditors make certain disclosures when a consumer is applying for a loan or credit card. The Act applies to a creditor when four requirements are met:

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

The act does not apply to:

  1. Creditors who extend credit mostly for business, commercial, agricultural, or organizational purposes
  2. Student loan programs
  3. Close-ended Credit Transactions (ex. Sales credit and loans)

What Must a Creditor Disclose to a Consumer?

A creditor must make the following disclosures:

  • 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

For open-ended credit transactions, such as home equity lines or bank credit cards, extra disclosures need to be made:

  • 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 a Creditor Violates the Act?

Creditors are liable for not meeting all of the disclosure requirements, even if the consumer is not harmed by the creditor’s failure to disclosure. However, there are two exceptions:

  1. The error is corrected within 60 days of discovery by the creditor (not by the consumer); or
  2. The failure to disclose is a genuinely unintentional error

Should I Seek Legal Help?

If your creditor has not made sufficient disclosures, you may be entitled money damages. You should consult with a consumer protection lawyer who will be able to advise you of your rights and options.

Photo of page author Jessica Tam

, LegalMatch Legal Writer

Last Modified: 04-12-2018 05:31 PM PDT

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