With the cost of new cars often exceeding $30,000, very few people are able to buy a car without taking out a loan. But for many of us, the terms of the loan are confusing and we often don’t know what we are agreeing to. Thanks to the federal Truth-in-Lending Act, passed in 1968, lenders are required to inform the borrower in clear terms of what the cost of the loan will be. If a lender fails to provide this information, he may be committing fraud.
What the Truth in Lending Statement Should Include
Before asking a borrower to sign a loan contract, the Truth-in-Lending Act (TILA) requires that lenders provide a statement that includes all of the following information:
Annual Percentage Rate. The APR is the cost of credit expressed as a yearly rate in a percentage.
Finance charges. This is the total amount of interest and certain fees you will pay over the life of the loan if you make every payment when due.
Amount financed. This is the amount of credit provided to you. In other words, this is the amount you are borrowing.
Total of payments. This is the sum of all the payments that you will have made at the end of the loan, including repayment of the principal amount of the loan plus all of the finance charges.
Other important terms. The TILA statement must also inform you of the number of payments, the monthly payment, late fees, whether you can prepay your loan without a penalty, and other important terms.
The TILA disclosure will probably be provided as part of the loan contract, so you may be given the entire contract when you ask for the TILA disclosure. Be sure to review the entire contract and pay special attention to the above disclosures. Never sign a loan contract without reviewing the TILA disclosures. These disclosures are required to be given to you, in written form prior to your signing the credit contract. Often these credit contracts will include a statement that you were given a copy of prior to your signing it. DO NOT sign it until you are given time to review and understand it. Ask for a copy for you to take home to review BEFORE you sign. Dealers will resist, but they are required to give you a copy to keep prior to purchase. If they do not it is a violation of the VTLA.
If Your Rights Are Violated, Call an Attorney
If you feel your Truth-in-Lending rights were violated in any way, contact The Consumer Law Group, P.C. to find out what you can do about it. You are entitled to understand the terms of any loan you sign and if you are misled by a lender, you are entitled to take action against them.