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Truth in Lending Disclosure

Function: noun

The Truth in Lending Disclosure is a document traditionally with four small boxes at the top. It contains the APR, which is a statistic which is confusing to borrowers since it is different and generally higher than the rate they were quoted. The Truth in Lending Disclosure contains information about the total amount financed and the total of all interest payments over the life of the loan. It includes information about which payments are made on what dates and how much they are for.

The APR is different from the rate. There are different ways of explaining the APR, but here is the clearest one: The APR is the annual percentage relationship between the payments and the amount borrowed minus the fees. This rate is often used to compare the different loans borrowers have to choose from. The rate, on the other hand, is a monthly percentage relationship between the payments and the total amount borrowed, including fees.

Definition 1:
A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for a loan. The Truth in Lending Disclosure is the document that is the first place to look for the APR.