TILA or Truth in Lending Act as a Claim Against a Dealer: Do I have a TILA claim?

Do I have a TILA, Truth in Lending, claim?

The Truth In Lending Act is Federal legislation that protects the 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's fees and costs.


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 are "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 both 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

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

The Truth in Lending Act, also known as TILA, is interpreted by Regulation Z, (REG Z) and it explains how TILA is applied and the principles and the purpose of various sections of the Statute.

There is an entire section on disclosure and the timing of the disclosures. There is an entire section on advertising requirements.

TILA rights are technical and the Truth in Lending Act is somewhat complicated with the regulations but can be an effective tool in enforcing your consumer rights

Consumer Regulations and the FDIC.

Many times a Truth In Lending act claim can form the basis for a deceptive acts or practices in violation of industry standards or in violation of New Jersey law or in violation of the Administrative Code. As an example the Truth In Lending act prohibits various lending practices for specific transactions. The time limitations are significantly stricter than the time limitations under the New Jersey Consumer Fraud Act and there were certain taps and restrictions on types of transactions to which the Truth In Lending act apply.

However, it is potentially an option to apply the Truth In Lending act and the various actions which are potentially deceptive to a transaction applying the Consumer Fraud Act. While there are some very good arguments that there is no claim under the New Jersey Consumer Fraud Act because there is no specific claim under the Truth In Lending act is a possible defense. However, much of the conduct restricted under the Truth In Lending act should be prohibited under state law as a deceptive practice or a deceptive manner of doing business.

The Truth In Lending act can potentially be a very technical claim and one needs to be very familiar with the Code of Federal Regulations and regulation Z. The code of regulations and regulations Z forms the backbone of any claim under the Truth In Lending act if there is a question. You need to familiarize yourself with this body of law intent on proceeding with a claim under the Truth In Lending act might be prohibited by the Code of Federal Regulations, CFR, or regulation Z.

There are some very good claims actionable under the federal law and there are some very good claims actionable under state law based on the aforementioned regulations and federal statutes. However the claims of technical and you need to be very familiar with all of the body of law underlying these types of claims.