Financial Mathematics
The Truth in Lending Act (TILA) is a federal law enacted to promote informed consumer credit decisions by requiring clear disclosure of key terms of the lending agreement. This act aims to provide transparency by ensuring that lenders disclose the costs and terms associated with borrowing, including interest rates and fees, which helps consumers understand the true cost of credit. Understanding TILA is essential as it relates to the effective annual rate, which represents the true annual cost of borrowing when compounding is taken into account.
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