Under which provision do lenders have to inform borrowers about the total cost of the loan?

The Truth in Lending Act (TILA) is the provision under which lenders are required to inform borrowers about the total cost of the loan. TILA aims to promote informed consumer decisions by ensuring that borrowers receive clear and concise disclosures regarding the terms of a loan. This includes the total cost of the loan, the annual percentage rate (APR), and other important financing details. By mandating these disclosures, TILA helps borrowers understand the full financial implications of their borrowing decisions, promoting transparency and allowing them to compare offers from different lenders effectively.

In contrast, while the Equal Credit Opportunity Act (ECOA) focuses on preventing discrimination in lending, and the Home Mortgage Disclosure Act (HMDA) collects data to ensure that lenders are providing equal access to credit, they do not specifically deal with the disclosure of loan costs. The Real Estate Settlement Procedures Act (RESPA), on the other hand, addresses the settlement process and the costs associated with it but does not encompass the total cost of the loan in the same way TILA does. Therefore, TILA is the cornerstone regulation responsible for ensuring borrowers are fully informed about the costs associated with their loans.