TRUTH IN LENDING ACT

Question 1

This policy is declared to protect people from a lack of awareness of the true cost of credit by assuring full disclosure of such cost.

Answer 1

Truth in Lending Act

Question 2

R.A 3765 also known as

Answer 2

the “Truth in Lending Act”

Question 3

Who is covered under the R.A 3765?

Answer 3

any creditor

Question 4

It includes interest, fees, service charges, discounts, and other charges incident to the extension of credit as may be prescribed by the Monetary Board of the BSP through regulations.

Answer 4

Finance Charge

Question 5

The creditor or lender is required to inform the debtor or borrower of the following facts:

Answer 5

(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);
(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.

Question 6

When and how should these information be furnished to the debtor or borrower?

Answer 6

The information must be disclosed to the debtor prior to the consummation of the transaction.

Question 7

In what form should the information be stated?

Answer 7

Written

Question 8

When there is a violation of the Truth in Lending Act, what happens to the obligation?

Answer 8

The contract or transaction remains valid or enforceable but subject to penalties.