Republic Act No. 3765, also known as the “Truth in Lending Act”, is a law requiring the disclosure of finance charges in connection with the extension of credit. This is a summary of the Truth in Lending Act.
What is the policy behind the Truth in Lending Act?
The declared policy behind the law is to protect the people from lack of awareness of the true cost of credit by assuring full disclosure of such cost, with a view of preventing the uninformed use of credit to the detriment of the national economy.
Who are covered under the Truth in Lending Act?
The law covers any creditor, which is defined as any person engaged in the business of extending credit (including any person who as a regular business practice make loans or sells or rents property or services on a time, credit, or installment basis, either as principal or as agent) who requires as an incident to the extension of credit, the payment of a finance charge.
In that definition, what is meant by “credit”?
It means any loan, mortgage, deed of trust, advance, or discount; any conditional sales contract; any contract to sell, or sale or contract of sale of property or services, either for present or future delivery, under which part or all of the price is payable subsequent to the making of such sale or contract; any rental-purchase contract; any contract or arrangement for the hire, bailment, or leasing of property; any option, demand, lien, pledge, or other claim against, or for the delivery of, property or money; any purchase, or other acquisition of, or any credit upon the security of, any obligation of claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect.
In the same definition, what is meant by a “finance charge”?
A finance charge includes interest, fees, service charges, discounts, and such other charges incident to the extension of credit as may be prescribed by the Monetary Board of the Bangko Sentral ng Pilipinas through regulations.
What are the information required to be furnished to the debtor or borrower?
The creditor or lender is required to inform the debtor or borrower of the following facts:
- (1) the cash price or delivered price of the property or service to be acquired;
- (2) the amounts, if any, to be credited as down payment and/or trade-in;
- (3) the difference between the amounts set forth under clauses (1) and (2);
- (4) the charges, individually itemized, which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit;
- (5) the total amount to be financed;
- (6) the finance charge expressed in terms of pesos and centavos; and
- (7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation.
When and how should these information be furnished to the debtor or borrower?
The information enumerated above must be disclosed to the debtor or borrower prior to the consummation of the transaction. The information must be clearly stated in writing.
What is the effect on the obligation in case of violations to the Truth in Lending Act?
The contract or transaction remains valid or enforceable, subject to the penalties discussed below.
What are the penalties in case of violation?
1. Any creditor who violates the law is liable in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such
transaction, whichever is the greater, except that such liability shall not exceed P2,000 on any credit transaction. The action must be brought within one year from the date of the occurrence of the violation.
2. The creditor is also liable for reasonable attorney’s fees and court costs as determined by the court.
3. Any person who willfully violates any provision of this law or any regulation issued thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment of not less than 6 months, nor more than one year or both.
However, no punishment or penalty under this law shall apply to the Philippine Government or any agency or any political subdivision thereof.
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Magandang umaga po. Ako po ay nag loan sa isang lending company year 2010 or 2011. Sa pagkaka alam ko po ay nkabyad n ako sa knila dahil may collector n pumunta s akin. Lasy year po may nag punta dto galing sa kumpanya nila at sinisingil ako ng nasa mahigit 100k dhil daw sa interest kya lumaki. Sbi ko s loob ng mahabang panahon hindi nila ako ininform n may balanse p ako di naman ako umalis sa trabaho o kaya lumipat ng bahay. Di ko rin kasalanan kung ang tauhan nila ay nagluko pala at di ipinapasok ang bayad ko. Di ko naman din po alam na hindi pumapasok ang byad ko. Meron po b akong karapatan? O wala po akong magagawa kung hindi mag byad ng sinisingil nila s akin. S loob ng apat n taon di naman po sila nag inform tapos biglang pupunta sa akin at maniningil ng pagkalaki laki. Maaari po bang maghulog lamang ng kya ko lamang dahil wala akong maipakita sa kanila n record o resibo ng pinag bayaran ko nuon di ko naman po alam na hindi ipinapasok ang hulog ko?
Purchased a 2015 Honda Beat Scooter at 74,000.00 pesos Dec 2015 through TRANSFARM FINANCE & LEASING CO.INC. No finance contract was given to me prior to the transaction as required by law. Down payment was 20,000 pesos with monthly payments of 6,004 pesos for 1 year. Paid 10,000 pesos every month until July 2016 at 2.2 %. By my calculator I have spent 90,000 pesos for a 74,000 peso scooter. I have no finance contract, no summary computation, no title and no permanent metal license plate. The scooter is now paid in full. I have no clean title, no nothing but excuses from office in Mandaue. I am holding back July final payment until I can get my correct documentation. Every month the office has ignored my requests, made excuses and now say legal counsel will contact me within the week. I am being told I am the first customer that has asked for a copy of the finance contract and computation summary and the company has had 7 months to provide with the papers and have failed. What is wrong with the way this company conducts business (Truth in Lending Act) and why is this company still in business? The company had 7 months to correct their practice but it is easier to lie, cheat and deceive the consumers over and over again without just consequences or justice for the consumers.
Hi atty may tatanong po ako.nag abroad po ako noong 2008 sa taiwan.pro nag shutdown po ang company na pi nag tatrabaho an ko dun pi na uwi po kami lahat.nag loan po ako sa isang leanding firm amount 50k.tapos ngayun lng po cla nag bigay ng notice na bayaran ko daw.umabot na ng 400k na po.pls help me atty.salamat po.
Hi atty tanong ko lang po. may loan ako sa phillife hindi pa fully ngaun pero bayaran ko sana ung remaining months ung interest po ba ng ifully paid ko ay bayaran ko pa rin? kasi hindi tinanggal e nacash ko before sa due date na may 2018.
8% a month is usury. 98% in a year?No wonder lending firms blooms. The poor becomes poorer and the rich becomes richer. These kind of loans are almost impossible to pay back! I just wonder what kind of mind these lagislators posses, or is because they get the lions share? 8% is maybe just the minimum. How about the maximum? Interest earning interest. Wake up lagislators ! You are strangling the neck of the poor mass.
About the maximum, you do not need to look far away, salary loans charge 30% per month.
hi. i am claire. i pawned my atm (60mos to pay with 18% rate) to a “friendly thrift bank” in our town. Last February 2015 they ask me to reconstruct my loan, now my principal loan is 190,000.00. I am religiously paying 3,000 monthly plus 8,600 every bonuses (March & November) as they deduct those amount to my salary which deposited to the atm. Now i was expecting that my monthly dues is deducting from my principal loan, when i updated my loan(Sept 2016) i was surprised that my payment is only 31,141 for 18 months. should it be 83,100? i have passbook that shows my payment history and i even ask a copy of my Amortization Schedule and i cannot understand their loan product.
LDB HAS MY CAR CAR ON 5 YR LOAN. I CALLED THE BANK AND STATED THAT I WOULD LIKE TO PAY MY CAR LOAN IN A YEAR INSTEAD OF STILL TWO AND ONE HALF YEAR REMAINING. THEY SAY THE BANK DO NOT ALLOW THAT AND MUST COMPLETE THE 5 YEAR LOAN AS CONTRACTED.
i BELIEVE THE BANK PRACTICE IS ILLEGAL AND IF THE CUSTOMER WANTS TO PAY THE LOAN IN SHORT TIME IT IS HIS/HER DECISION. PLEASE LET ME KNOW IF THE BANK HAS A RIGHT TO WHAT THEY ARE INSISTING
TO WAIT UNTIL 5 YEARS. IS THAT LEGAL? PLEASE HELP
Ngloan po ako sa doctorcash 4k tapos 3,600 lang po nakuha ko kasi meron 10% processing fee with in 31 days d ko po nabayaran mahigit anim na buwan na may kaso po ba ako dun salamaat. Po email reply plzz
Hi wat happen po pinuntahan po ba kau?
May loan din ako with doctor cash..ung 8k n loan amount ko is 7200 lng nreceived ko and now they are trying to collect almost 18k..and sobrang harrassment n ng collections nla nrereceived ko..what if i decided not to pay them back makakasuhan po b ko?? Nkpaghulog nko s kanila ng 3200.. pls email n lng po ng reply..thanks
Hi po pinuntahan po ba kau sa bahay?And under the sa Pinas wala naman po nakukulong jan
Hi romel same here wat happen na po? Hanggang ngaun po po d nio pa po binabayaran
may debt rn po kami sa doctor cash kaso di po namin nabayaran dahil baon po kami sa utang. nag send ng text sa wife ko na mag fifile ng complain against samin. hnd namin sila ni rereplyan ever since kasi wala pa kami pambayad. makukulong po ba ang asawa ko if ever?
ako din nagloan sa doctorcash last year pinadalhan ako ng sulat last week lang ang loan ko 10k lang ayaran ko daw ay 65,500 e nawalan ako ng trabaho mula january at ang cellphone ko nasnatch pa makukulong po a ko? sabi kc sa sulat ulit ulit daw sila nagremind e wala naman ako natatanggap ano yan pag lumaki na tsaka magpapadala ng sulat isang taon na nakaraan.
Ang alam ko po wala namang kulong na mangyayari. Ako po kase nag loan ako sa Loan Ranger. Parang doctor cash din siya. Lahat ng transactions via email din. Nagsesend sila ng letter na idedemanda ako. Totoo kaya yun?