What is the purpose of the Truth in Lending Act (TILA)?

The Truth in Lending Act (TILA) is primarily designed to promote informed consumer decision-making in credit transactions by requiring clear and meaningful disclosure of credit terms. One of its key provisions is to ensure that lenders provide borrowers with accurate information regarding the annual percentage rate (APR) of loans, which reflects the true cost of borrowing, including interest and associated fees. This clarity allows consumers to compare different financing options effectively, ensuring that they are well-informed before entering into a loan agreement.

While the other options touch on important topics—such as protecting against inflated real estate prices, estate planning, and regulating insurance fraud—they are not the focus of TILA. The act specifically aims to enhance transparency in lending practices, which ultimately benefits consumers by equipping them with the knowledge necessary to make sound financial decisions.