Does a lender have to disclose the true cost of a loan before I sign?

What the Law Says

The Truth in Lending Act (TILA) is a federal consumer protection law designed to ensure borrowers receive clear, consistent information about loan costs before committing.

TILA requires lenders to provide standardized disclosures so consumers can compare credit offers and understand the full cost of borrowing—not just the interest rate, but all associated fees and charges.

These disclosures must be provided in writing, in a clear and conspicuous format, and delivered before the loan is consummated (i.e., before you sign the loan agreement).

The law applies to most personal, family, or household credit transactions involving finance charges or repayment over more than four installments—including mortgages, auto loans, credit cards, and personal loans.

Statutory Text

The Congress finds that economic stabilization would be enhanced and the competition among financial institutions improved if the consumers were provided with meaningful disclosure of credit terms so that they may more readily compare the various credit terms available to them and avoid the uninformed use of credit.

— 15 U.S.C. § 1601 — Congressional findings and declaration of purpose

What to Do

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