According to the Truth in Lending Act (Regulation Z), when must a residential lender provide a loan applicant with a disclosure statement regarding finance charges?

The Truth in Lending Act (TILA), as implemented by Regulation Z, is designed to promote informed use of consumer credit by requiring disclosures about its terms and cost. According to TILA, a residential lender must provide a disclosure statement regarding finance charges within three business days after receiving a written application for credit. This requirement ensures that borrowers have adequate information about the costs associated with their loan early in the process, allowing them to make informed financial decisions.

This three-day timeframe is critical because it establishes a benchmark for lenders to follow, creating transparency and helping protect consumers from hidden costs. The information disclosed includes the annual percentage rate (APR), additional fees, and the total cost of the loan, which is vital for a borrower’s understanding and comparison of loan options. Adhering to this regulation fosters trust and clarity within the lender-borrower relationship, ensuring that consumers are empowered to navigate their financing choices efficiently.