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The Truth in Lending Act

The Truth in Lending Act aims to protect citizens from a lack of awareness of the true cost of credit by requiring full disclosure of credit costs. Creditors must provide clear written statements to borrowers prior to any transaction, detailing items like the cash price, down payment, total amount financed, finance charges as a percentage of the total amount. Covered transactions include loans, mortgages, credit sales, rental purchases, and more. Creditors who do not comply are liable for fines and damages. Non-compliance can result in penalties like fines up to P5,000 or imprisonment.

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70 views10 pages

The Truth in Lending Act

The Truth in Lending Act aims to protect citizens from a lack of awareness of the true cost of credit by requiring full disclosure of credit costs. Creditors must provide clear written statements to borrowers prior to any transaction, detailing items like the cash price, down payment, total amount financed, finance charges as a percentage of the total amount. Covered transactions include loans, mortgages, credit sales, rental purchases, and more. Creditors who do not comply are liable for fines and damages. Non-compliance can result in penalties like fines up to P5,000 or imprisonment.

Uploaded by

Marem Riego
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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The Truth In Lending

Act
Republic act 3765
Atencio, Lovely Kae S.
Bautista, Tricia Mae S.
Vargas, Mary Grace F.
Yusi, Lawrence
Purpose of the Law

It is declared to protect its citizens from a


lack of awareness of the true cost of credit to
the user by assuring a full disclosure of such
cost with a view of preventing the
uninformed use of credit to the detriment of
the national economy
The Obligation of Creditors to persons to
whom credit is extended
Any creditor shall furnish to each person to whom credit is
extended, prior to the consummation of the transaction, a clear
statement in writing setting forth, to the extent applicable and in
accordance with rules and regulations prescribed by the Board, the
following information:
(1) the cash price or delivered price of the property or service
to be acquired;
(2) the amounts, if any, to be credited as down payment and/or
trade-in;
(3) the difference between the amounts set forth under clauses
(1) and (2);
The Obligation of Creditors to persons to
whom credit is extended
(4) the charges, individually itemized, which are paid or to be paid
by such person in connection with the transaction but which are not
incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding unpaid
balance of the obligation.
Covered and excluded transactions
COVERED TRANSACTION

Credit means:
 any loan, mortgage, deed of trust, advance, or discount;
 any conditional sales contract;
 any contract to sell, or sale or contract of sale of property or
services, either for present or future delivery, under which part
or all of the price is payable subsequent to the making of such
sale or contract;
 any rental- purchase contract;
Covered and excluded transactions
COVERED TRANSACTION

 any contract or arrangement for the hire, bailment, or leasing


of property;
 any option, demand, lien, pledge, or other claim against, or for
the delivery of property or money;
 any purchase, or other acquisition of, or any credit upon the
security of, any obligation of claim arising out of any of the
foregoing; and
 any transaction or series of transactions having similar
purpose or effect.
Covered and excluded transactions
EXCLUDED TRANSACTION

 Credit Line
Consequences of non- compliance with obligation
 liable to such person in the amount of P100 or in amount equal
to twice the finance charged required by such creditor in
connection with such transaction, whichever is the greater,
except that such liability shall not exceed P2,000 on any credit
transaction.

 fined by not less than P100 or more than P5,000 or


imprisonment for not less than 6 months, nor more than 1 year
or both
Reference
• Dula, Jose. [Atty. Jose Dula, CPA].(2022).RFBT 8.3 Truth in
Lending Act.YouTube. https://youtu.be/pz2B2txlciA
Thank you

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