Which act requires full disclosure of finance charges?

Which act requires full disclosure of finance charges?

• A. Truth in Lending Act
• B. Consumer Credit Protection Act
• C. Fair Credit Reporting Act
• D. Equal Credit Opportunity Act

Answer: (B)

The act that requires full disclosure of finance charges is the Truth in Lending Act. This federal law was enacted in 1968 to promote informed use of consumer credit by requiring clear disclosure of the terms and conditions of loans and credit. One of its primary objectives is to ensure borrowers are fully aware of the costs of borrowing, including finance charges, so they can make informed decisions. Under the Truth in Lending Act, lenders must provide borrowers with a clear and concise disclosure of the finance charges, annual percentage rates (APR), and other key terms. This transparency helps to prevent deceptive lending practices and allows consumers to compare different credit offers. The act applies to a wide range of consumer credit transactions, making it a critical component of consumer protection in the financial sector. While the Consumer Credit Protection Act encompasses various consumer protections related to credit, the specific requirement for the disclosure of finance charges is strictly attributed to the Truth in Lending Act. Other acts mentioned, such as the Fair Credit Reporting Act and the Equal Credit Opportunity Act, focus on credit reporting and non-discrimination in lending, respectively, rather than specifically on finance charge disclosures.

The act that requires full disclosure of finance charges is the Truth in Lending Act. This federal law was enacted in 1968 to promote informed use of consumer credit by requiring clear disclosure of the terms and conditions of loans and credit. One of its primary objectives is to ensure borrowers are fully aware of the costs of borrowing, including finance charges, so they can make informed decisions.

Under the Truth in Lending Act, lenders must provide borrowers with a clear and concise disclosure of the finance charges, annual percentage rates (APR), and other key terms. This transparency helps to prevent deceptive lending practices and allows consumers to compare different credit offers. The act applies to a wide range of consumer credit transactions, making it a critical component of consumer protection in the financial sector.

While the Consumer Credit Protection Act encompasses various consumer protections related to credit, the specific requirement for the disclosure of finance charges is strictly attributed to the Truth in Lending Act. Other acts mentioned, such as the Fair Credit Reporting Act and the Equal Credit Opportunity Act, focus on credit reporting and non-discrimination in lending, respectively, rather than specifically on finance charge disclosures.