Truth in Lending Act Lenders Required to Disclose

RA 3765 ● Banks and other financial institutions

● Any person in the business of extending credit,
either principal or agent
Purpose
● To protect the public from lack of awareness
of the true cost of credit
Effects if the Creditor Fails to Disclose
● Requiring the creditor the disclosure of fill ✔ Credit transaction remains valid and enforceable
information incident to a credit transaction
Remedies of Debtors:
Civil case Recovery of damages
Important Terms (must be ↪ Higher of:
brought w/in 1 ● ₱100 or
● Board - Monetary Board of BSP
yr. from the date ● twice the finance charge
● Credit
of occurrence of ↪ but not to exceed ₱2k
● Finance charge - incident to the extension of
violation)
the credit
● Creditors - requires the payment of the finance
Criminal case Penalty:
charge
(if nondisclosure ● Fine: ₱1k to ₱5k
● Person
is willful) ● Imprisonment: 6 mos. to
1 yr.
● Both
Disclosure Requirement
↪ Lender will have no right to collect such charge or
➔ Prior to the consummation of the transaction increase
➔ Clear statement in writing:
◆ Cash price of delivered price of the
property/service to be acquired
Examples of Violations
◆ Amounts to be credited as
downpayment/trade-in ● Requiring debtors to sign documents and
◆ Difference of cash price and promissory notes in blank, and then
downpayment unilaterally filling them up later on
◆ Charges paid/to be paid by person - ● Creditor unilaterally fix the interest rate;
not incident to the extension of credit promissory note does not contain clear
◆ Total amount to be financed statement in writing the finance charge
◆ Finance charges (in pesos and
centavos)
◆ Percentage of finance charge vs. the
amount to be financed (expressed as
a simple annual rate on the
outstanding unpaid balance of the
obligation)

Aggregate consideration on the part of the

debtor (down payment + installments) xx

Less: Sum of the cash price and non-finance

charges xx

Total finance charge xx

Reference: Atty. Azores’ Pre-Recorded Video Lectures