 TITLE: Truth in Lending Act States What Lenders Must Tell You CONTENT: ###### Written by: Kristy Welsh\n_Last Updated: November 2, 2017_\nHow can you be expected to open a credit card or take out a loan if you aren’t told all the terms of the agreement? You can’t, which is why we have the Truth in Lending Act. Enacted in 1968, this law requires lenders to make certain disclosures before extending credit to you. It’s a long list of requirements, but we’ve summarized the basics for you here, including what lenders must state in ads and applications, and what must be included in your billing statements.\nOpen End Credit\n---------------\nThis is also known as _revolving_ credit, meaning there is no end date for it. This includes **credit cards**, **home equity lines of credit**, and **personal lines of credit**.\nBefore you are extended open end credit, the lender must disclose the following:\n*   How long you have to pay before finance charges will be imposed on charges you make\n*   How they will determine the balance that you are assessed finance charges on\n*   How they will determine the amount of the finance charge itself\n*   Other types of charges that may be assessed\n*   In the case of secured credit cards, acknowledgement of the deposit received\nThe lender must also provide you with a **statement** each billing cycle, which should include:\n*   Your balance at the beginning of the statement period\n*   Breakdown of each transaction during the period (date, description)\n*   Amount credited to your account during the period\n*   Finance charges imposed during the period\n*   Balance on which the finance charge is based\n*   Your balance at the _end_ of the statement period\n*   When you must pay the end balance in order to avoid finance charges\n*   Where you can mail inquiries about your bill\n*   A minimum payment warning that reads something like this: \"Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance.\"\n*   How long it would take you to pay off the balance if you only make minimum payments on the balance, and how much that would cost you\nIn **ads and applications for credit cards**, lenders must disclose:\n*   Annual percentage rates\n*   Annual fees and other fees\n*   Grace periods for avoiding finance charges (or statement that there is no grace period)\n*   How balances are calculated\n*   Refer to temporary annual percentage rates as \"introductory\"\nFor **open end credit secured by a home**, lenders must disclose:\n*   Fixed annual percentage rate\n*   Variable percentage rate\n*   Other fees\n*   Repayment options\n*   Statements addressing balloon payments, negative amortization (if applicable), and tax deductibility\n**Closed End Credit**\n---------------------\nThis is also known as _non-revolving_ credit or _installment_ credit — credit that ends once it is paid off. This includes **auto loans**, **student loans**, **mortgages**, and **personal loans**.\nBefore you are extended closed end credit, the lender must disclose the following:\n*   Amount financed\n*   Finance charge\n*   Total of payments (amount financed + finance charge)\n*   Payment schedule\n*   If secured, acknowledgement of the security received\n*   Late payment fee\n*   Additional disclosures specific to mortgages\nLearn more about the difference between revolving and non-revolving credit.\n### **More on these disclosures**\nAgain, the required disclosures listed here are summarized. To see the specific language of each — as well as more detailed information — you can take a look at the [Truth in Lending Act](;edition=prelim) yourself. It’s a lengthy document, but we can at least tell you where to look so you don’t have to weed through the whole thing.\nYou can scroll through the Act to find the following sections, or you can click the links to go straight to them via Cornell Law School’s website.\nFor more on:\n*   Open end credit, see Section 1637\n*   Open end credit secured by consumer’s principal dwelling, see Section 1637a\n*   Closed end credit, see Section 1638\n### **Other laws you need to know**\nCredit reporting agencies and debt collection companies have strict laws to follow, too. Get the facts in our Quick Guide to the Fair Credit Reporting Act and FDCPA Violations: What Debt Collectors Cannot Do. END