TRUTH IN LENDING ACT

RA No. 3675
○​ Option, demand, lien,
pledge, or other claim
AN ACT TO REQUIRE THE DISCLOSURE OF against, or for the delivery
FINANCE CHARGES IN CONNECTION WITH of property or money
EXTENSIONS OF CREDIT ○​ Purchase, or other
acquisition of, or any credit
“Growling financial watchdog of hapless upon the security of, any
borrowers.” obligation of claim arising
out of any of the foregoing
-​ To protect its citizens from a lack ○​ Transactions having a similar
of awareness of the true cost of purpose/effect
credit to the user by assuring a full ●​ Credit Line [EXCLUDED]
disclosure of such cost with a view ○​ Hindi pa contract of loan
of preventing the uninformed use ○​ Preparatory to a contract of
of credit to the detriment of the loan
national economy.
-​ Protect debtors by permitting them
to fully appreciate the true cost of Obligation of Creditors to Persons to
their loan—for them to give their Whom Credit is Extended
full consent and to properly -​ Shall furnish to each person to
evaluate their options whom credit is extended, prior to
-​ Lenders required to disclose: banks the consummation of the
and other financial institutions; transaction, a clear statement in
any person in the business of writing setting forth the ff. info.:
extending loans, or selling or -​ cash price/delivered price
renting property or services -​ amounts, if any, to be
credited as down payment
Covered and Excluded Transactions and/or trade in
●​ “Credit” means: [COVERED] -​ difference between the
○​ Loan, mortgage, deed of amounts set forth under the
trust, advance, or discount clauses above
— contract of loan -​ charges, individually
○​ Conditional sales contract itemized
○​ Contract to sell, sale, ●​ paid or to be paid in
contract of sale of property connection w the
ot services (either for transaction but not
present or future delivery) incident to the
○​ Rental-purchase contract extension of credit
○​ Contract or arrangement of -​ Total amount to be financed
the hire, bailment, or -​ finance charge
leasing of property
 ●​ expressed in pesos
and centavos * Contracts containing conditions which
●​ interest, fees, make its fulfillment dependent
service charges, exclusively upon the uncontrolled will of
discounts, and other one of the contracting parties is VOID.
charges incident to
the extension of * Promissory note is an acknowledgement
credits of a debt and commitment to repay it on
●​ penalty charge the date and under the conditions that the
-​ % the finance bears to the parties agreed on, so even if some items
total amount to be financed are not disclosed in the Disclosure
Statement, as long as it is stated in the
* Penalty clause is allowed so long as the promissory note, it constitutes a
amount/rate of the charge and the substantial compliance to the Truth in
conditions under which it is to be paid are Lending Act.
disclosed to the borrower before he
enters into the credit agreement. * If not disclosed in any document prior to
the consummation of the availment or
Consequences of Non-Compliance with drawdown, the lender has no right to
Obligation collect upon such charge.
Sec. 6(a)
-​ Shall be liable to such person in the
amount of P100 or in an amount
equal to twice the finance charge,
whichever is greater (such liability
shall not exceed P2,000 on any
credit transaction).
-​ civil cause of action
Sec. 6(c)
-​ willful violation = shall be fined by
not less than P100, or more than
P5,000, or imprisonment for not
less than 6 months, nor more than
one year or both.
-​ criminal offense

* Violation of the Act gives rise to both

* In order that obligations arising from