What is the primary purpose of the Truth in Lending Act (TILA)?

The primary purpose of the Truth in Lending Act (TILA) is to ensure transparency in lending practices. TILA was enacted to protect consumers by requiring clear and conspicuous disclosures of key terms and costs associated with various types of credit, including mortgage loans. This transparency allows borrowers to understand the true cost of credit, enabling them to make informed financial decisions. It mandates lenders to disclose essential information such as the annual percentage rate (APR), additional fees, and the total cost of the loan, which all contribute to a clearer understanding of the financial obligations involved.

This focus on transparency is crucial for consumers because it helps prevent deceptive lending practices and ensures that borrowers are aware of their rights and responsibilities before entering into any credit agreement.