legal
Truth in Lending Act
A federal law requiring lenders to disclose loan costs and APR clearly to consumer borrowers, primarily implemented through Regulation Z.
In depth
The Truth in Lending Act (TILA) requires lenders to disclose APR, finance charge, total of payments, and key loan terms in standardized form. Regulation Z implements TILA. The 2015 TRID combined TILA with RESPA disclosures into the Loan Estimate and Closing Disclosure. Misconception: TILA does not apply to all lending; investor and commercial loans are exempt. Practically, in residential seller-financed deals, TILA may apply if the seller is considered a creditor under Regulation Z (originating more than 5 loans per year secured by dwellings). Sellers using a licensed RMLO satisfy TILA through the RMLO. Violations can give the borrower rescission rights and damages. Always confirm TILA applicability before closing a residential seller-financed loan.
Related terms
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.