Consumer lending was booming in the 1960’s. With this rapid growth came significant consumer growing pains. There was little consistency of interest rate and fee disclosures among similar loan types by lenders. To further compound this issue, there were numerous ways of calculating interest.

In order to bring truth and clarity to the lending and credit industry, President Lyndon B. Johnson signed the Consumer Credit Protection Act (CCPA) into law which included the Truth In Lending Act (TILA.) The TILA requires all lenders to extend credit using a standardized format and terminology defined in the TILA.

Congress found that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of consumer credit. The informed use of consumer credit results from an awareness of its true cost by consumers like you. The TILA not only assures a meaningful disclosure of consumer credit terms so that the various credit terms available will be able to be compared more easily and the uninformed use of credit can be avoided, but also protects the consumer against inaccurate and unfair credit billing and credit card practices.

The TILA laid the framework for today’s financial system. Loans are bought and sold with ease because of the consistency in financial terms and default penalties.