Truth In Lending Act (TILA)

The Truth In Lending Act  is Federal legislation that protects consumer by requiring , among other things, complete disclosure such as the interest rate, number of payments, amount financed, amount paid to others, amount retained by sellers, name of the creditor and address of the creditor.  The Truth In Lending Act is a strict liability statute.  There is no intent requirement. The lender can violate the statute by mistake and continue to be liable for a violation of the Truth In Lending Act.  Under some circumstances there is a good faith defense.  There are statutory damages and mandatory attorney fees and costs.

NEGATIVE EQUITY

This is a term that means the market value or actual cash value of your trade vehicle is less than the value of the loan.  Other terms used in the industry and upside down or buried.  The Truth In Lending Act requires that the negative equity be disclosed in the retail installment sales contract under amount paid to others, because it is paid to the finance company.  A common dealer tactic is to lie to the consumer about the value of their trade.  The salesman will state that the customer is getting a certain amount for the trade when in fact the dealer is only inflating the price of the car to offset the negative equity.  This violates the Truth In Lending Act because it must be disclosed in writing in the retail agreement.  The Truth In Lending Act permits statutory and actual damages

Example: (Proper disclosure)

Price $20,000 (Nothing down, financing 100%)
Trade value $10,000
Loan Payoff $13,000
Amount financed $23,000

Example (Improper disclosure)
Price $23,000(Nothing down, fiance 100%)
Trade value$13,000
Amount financed $23,000

Cases
Thompson v. 10000 RV Sales, 130 Call.App4th 950 (2005)
Wallace v. Walker Auto Sales, 155 F.3d. 927 (CA 7th Circuit)