What law promotes informed use of consumer credit by requiring disclosures of terms and costs?

The law that promotes informed use of consumer credit by requiring disclosures of terms and costs is the Truth in Lending Act (TILA). This legislation was enacted to ensure that borrowers understand the terms of their loans, including the annual percentage rate (APR), finance charges, and any other related costs associated with obtaining credit. By mandating clear and concise disclosure of these details, the Truth in Lending Act seeks to protect consumers from hidden fees and misrepresentation by lenders.

The significance of this act lies in its goal to promote transparency in credit transactions, enabling consumers to make informed financial decisions. For instance, when a consumer applies for a loan, they receive a disclosure statement that outlines the borrowing terms and associated costs, making it easier for them to compare different loan offers. This transparency is critical in fostering trust between lenders and consumers in the financial marketplace.

The other options, while also related to credit and finance, serve different purposes. The Equal Credit Opportunity Act prohibits discrimination in lending, ensuring fair access to credit regardless of race, gender, or other characteristics. The Real Estate Settlement Procedures Act focuses on standardizing settlement practices and ensuring that consumers are provided with timely and accurate information regarding the costs of real estate transactions. The Loan Disclosure Act is a term that may refer to