Truth in Lending Act  -- Know the Cost of Credit

Truth-in-lending regulations were passed under the Federal Trade Commission law known as the Trust in Lending Act.  It is designed to insure that lenders must inform consumers of the exact credit terms and costs before entering into a credit-related transaction.  This allows the consumer to compare the costs from various lenders on the same basis.  

The law requires that lenders disclose the "annual percentage rate" (APR) of interest, fees, and finance charges on a loan, which represents the true yearly cost of the credit offered.  

Advertising that uses "triggering terms" to attract your attention, such as "zero down", or "just $500 a month", must also include (usually in small print at the bottom of the advertising):

• the amount or percentage of down payment
• terms of repayment
• annual percentage rate (APR), using that term
• whether the APR may be increased in the future

Make sure you get the full details of your loan or credit arrangement in writing before entering into a borrowing transaction.

For full details on the Truth in Lending Act, go to

www.fdic.gov/regulations/laws/rules/6500-200.html