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    Truth in Lending Act Report Outline

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    JM Enguito
    (1) The Truth in Lending Act aims to protect the public from lack of awareness of the true cost of credit by requiring full disclosure of credit costs. (2) It defines key terms like "credit", "finance charge", and "creditor". (3) The Act requires creditors to supply borrowers with a clear written statement of credit terms like interest rates and fees before consummating a transaction.

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    Truth in Lending Act Report Outline

    Uploaded by

    JM Enguito
    31 views3 pages
    (1) The Truth in Lending Act aims to protect the public from lack of awareness of the true cost of credit by requiring full disclosure of credit costs. (2) It defines key terms like "credit", "finance charge", and "creditor". (3) The Act requires creditors to supply borrowers with a clear written statement of credit terms like interest rates and fees before consummating a transaction.

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    (1) The Truth in Lending Act aims to protect the public from lack of awareness of the true cost of credit by requiring full disclosure of credit costs. (2) It defines key terms like "credit", "finance charge", and "creditor". (3) The Act requires creditors to supply borrowers with a clear written statement of credit terms like interest rates and fees before consummating a transaction.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    31 views3 pages

    Truth in Lending Act Report Outline

    Uploaded by

    JM Enguito
    (1) The Truth in Lending Act aims to protect the public from lack of awareness of the true cost of credit by requiring full disclosure of credit costs. (2) It defines key terms like "credit", "finance charge", and "creditor". (3) The Act requires creditors to supply borrowers with a clear written statement of credit terms like interest rates and fees before consummating a transaction.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    It has been said that one of the greatest disservice you can do a man is to lend him

    money that he can’t pay back. Republic Act No. 3765, aptly entitled “Truth in Lending Act”, aims
    to protect the public from lack of awareness of the true cost of credit 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.
    Before we go into the details of the act, let us first define the terms provided in the law.

    (1) "Board" means the Monetary Board of the Central Bank of the Philippines.

    (2) "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; 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 a similar purpose or effect.

    (3) "Finance charge" includes interest, fees, service charges, discounts, and such other charges
    incident to the extension of credit as the Board may be regulation prescribe.

    (4) "Creditor" means any person engaged in the business of extending credit (including any
    person who as a regular business practice make loans or sells or rents property or services on a
    time, credit, or installment basis, either as principal or as agent) who requires as an incident to
    the extension of credit, the payment of a finance charge.

    (5) "Person" means any individual, corporation, partnership, association, or other organized
    group of persons, or the legal successor or representative of the foregoing, and includes the
    Philippine Government or any agency thereof, or any other government, or of any of its political
    subdivisions, or any agency of the foregoing.

    What should be furnished before consummation of transaction?

    A creditor is required to supply to the borrower prior to each credit transaction a clear statement
    in writing of the following information: (refer to the slide)

    What are the scope of the requirements?

    Here are the transactions covered by the Truth in Lending Act. (refer to the slide)

    And the transactions not covered are: (refer to the slide)


    Who shall prescribe the rules and regulations in carrying out the provisions of the Act?

    The monetary board shall prescribe such rules and regulations as may be necessary or proper
    in carrying out the provisions of this Act. Any rule or regulation prescribed hereunder may
    contain such classifications and differentiations as in the judgment of the Board are necessary
    or proper to effectuate the purposes of this Act or to prevent circumvention or evasion, or to
    facilitate the enforcement of this Act, or any rule or regulation issued thereunder.

    Now let’s go to Inspection of contracts covering credit transactions.

    Posters of the Abstract of R.A 3765 shall be reproduced in a format which is 60 cm wide and 75
    cm long. These are the ones that we see on the premises posted in financial institutions such as
    banks, pawnshops, etc.

    Now let’s go to the Penal Provisions.

    (a) Any creditor who in connection with any credit transaction fails to disclose to any person any
    information in violation of this Act or any regulation issued thereunder shall be liable to such
    person in the amount of P100 or in an 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. Action to recover such penalty may
    be brought by such person within one year from the date of the occurrence of the violation, in
    any court of competent jurisdiction. In any action under this subsection in which any person is
    entitled to a recovery, the creditor shall be liable for reasonable attorney's fees and court costs
    as determined by the court.

    (b) Except as specified in subsection (a) of this section, nothing contained in this Act or any
    regulation contained in this Act or any regulation thereunder shall affect the validity or
    enforceability of any contract or transactions.

    (c) Any person who willfully violates any provision of this Act or any regulation issued
    thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment for not
    less than 6 months, nor more than one year or both.

    (d) No punishment or penalty provided by this Act shall apply to the Philippine Government or
    any agency or any political subdivision thereof.

    (e) A final judgment hereafter rendered in any criminal proceeding under this Act to the effect
    that a defendant has willfully violated this Act shall be prima facie evidence against such
    defendant in an action or proceeding brought by any other party against such defendant under
    this Act as to all matters respecting which said judgment would be an estoppel as between the
    parties thereto.
    With the disclosure required by law, it is expected that borrowers are able to weigh the pros and
    cons of borrowing. Such information allows them to evaluate their options in arriving at business
    decisions. Thus, even in matters of credit, knowing the truth sets us free.

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