Which regulation requires lenders to disclose the actual costs of borrowing to consumers?

The Truth in Lending Act (TILA) is the regulation that requires lenders to disclose the actual costs of borrowing to consumers. This act was established to promote informed use of consumer credit by requiring clear disclosure of key terms and costs associated with loans. Under TILA, lenders must provide borrowers with important information, such as the Annual Percentage Rate (APR), finance charges, and the total amount of payments, enabling consumers to make informed decisions regarding their borrowing options.

The act's objective is to facilitate transparency and help consumers understand what they are agreeing to when taking out a loan. By requiring these disclosures, TILA aims to protect consumers from deceptive lending practices and ensure that they are aware of the true costs of their loans, ultimately promoting fair lending practices across the industry.