Borrowing Money

Question 16 • 26-27 Ignite Technical Math-Financial Math - MA2007

How does Truth-in-lending benefit consumers when shopping for a loan?

Answer

Truth-in-lending allows consumers to be frank with the lenders and talk about very personal things.

Truth-in-lending requires all lending institutions to eventually convert all of their loans to fixed interest rates.

Truth-in-lending requires consumers to admit whether or not they can actually afford the loan they’re applying for.

Truth-in-lending allows consumers to know every cost that is associated with the loans they research and apply for, and helps them reach the optimal decision.

Explanation

Truth-in-Lending rules require lenders to disclose important loan costs and terms, such as the annual percentage rate and finance charges. This helps borrowers compare loans and make an informed choice. The correct choice is that consumers can learn the costs associated with loans they research and apply for; the rules do not require loans to become fixed-rate or require consumers to discuss personal matters.

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