TRUTH IN LENDING

How Truth in lending protects the buyer

When a person wants to purchase a piece of land he or she may want to do it on the instalment credit basis. It is here that truth in lending applies. The buyer must be given a statement known as truth–in–lending that includes the disclosure about all the details of the loan including the annual percentage rate of interest. This should be done either before the sale is made or on the day of the sale.

The truth in lending offers a great advantage to the buyer because it gives them the right to correct information as well as a time period in which the buyer can rescind the contract. This can be done within three business days from the date of contract. Even after the lapse of their business the lender or the seller must give you notice reminding you of your right to cancel the purchase. If you want to cancel the deal, the company needs to return all you money including any kind of deposit that may have been made. But, this right of rescind applies only when you are planning on using the property for your personal use. If the property is being bought for the purpose of investment then this right is not applicable. Then you may not rescind but on non-disclosure of the loan terms you may sue the lender. The lender may be sued for twice the finance charges that are up to $1000 on top of the legal cost as well as the court costs.

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Sample Template Preview

Federal Truth-In-Lending Disclosure Statement
(THIS IS NEITHER A CONTRACT NOR A COMMITMENT TO LEND)

Borrower(s):        __________________________________________________________

Property Address:    __________________________________________________________

Date:            ___________________________

ANNUAL
PERCENTAGE
RATE
The cost of your credit as a yearly rate

_________________%
FINANCE CHARGE
The dollar amount the credit will cost you

$_________________
Amount Financed
The amount of credit provided to you or on your behalf

$ _________________
Total of Payments
The amount you will have paid after making all payments as scheduled.

$_________________

___ REQUIRED DEPOSIT:  The annual percentage rate does not take into account your required deposit

PAYMENTS:    Your payment schedule will be:

NUMBER OF PAYMENTS
AMOUNT OF PAYMENTS
WHEN PAYMENTS ARE DUE

___DEMAND FEATURE: This obligation has a demand feature
___VARIABLE RATE: This loan contains a variable rate feature.  A variable rate feature has been provided earlier

INSURANCE: The following insurance is required to obtain credit:
___ Credit Life Insurance and credit disability ___ Property Insurance ___ Flood Insurance

You may obtain insurance from anyone you want that is acceptable to creditor
___ If you purchase ___ Property ___ Flood insurance from creditor you will pay $___  for a one year term

SECURITY: You are giving a security interest in:
___The goods or property being purchased  ___ Real property you already own

FILING FEES: $______________

LATE CHARGE: If a payment is more than _____ days late, you will be charged 5% of the monthly payment

PREPAYMENT: If you pay off early, you
___may          ___will not have to pay a penalty
___may          ___will  not be entitled to a refund of part of the finance charge

ASSUMPTION: Someone buying your property
___ may     ___may, subject to conditions ___ may not assume the remainder of your loan on the original terms.

See your contract documents for any additional information about nonpayment, default, and required prepayment in full before the scheduled date and prepayment refunds and penalties.

THE UNDERSIGNED ACKNOWLEDGE  RECEIVING A COMPLETED COPY OF THIS DISCLOSURE.

DATE: _________________

__________________________________        __________________________________
Purchaser/Borrower                Purchaser/Borrower