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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Hi, nag loan po ako sa Loan Ranger. 3k lang po ang niloan ko sakanila ngayon po ay 18,450. Nawalan po kasi ako ng work. May habol po ba sila dito? May na receive po akong letter na mag dedemanda po sila. Possible po ba na umabot to sa korte?
i have existing loan in certain company or bank, then after how many months i applied in senior high school and promoted to master teacher 1, i was planning to re loan because i already paid my loan for more than a year, all of the sudden i have been instructed that the lending bank will immediately deducted 3 months from my loan? does the lending bank has the rigth to deduct us 3months in our new loan or re loan?
ano na po news sa mga unpayed loans nyo?please reply…we had loan sa pjh lending din..also not in a good shape
gud day po,may loan po kami sa lending ask ko lang po sana kung tama ba ung penalty charges nila na ganun kalaki 6 days delayed lang po kmi pero almost 40% na ng hulog nmin ang charge nya,tama po b yung rules ng lending company n ganun?
Hi po. Hihingi lang po ng advice. 2015 po kasi magloloan po dapat ako sa Keycash and Paylite Lending, Inc. Pero hindi ko po tinuloy. May mga pinafill-up na forms then nung releasing na ay umalis na po ako dahil nalaman ko po na ang interest po nila ay hindi peso kundi Taiwan money pati tinext din po ako ng father ko na nagloan siya sa work niya. After po non tinawagan ako ng lending company at sinabi ko pong hindi ko na po itutuloy. Just recently, tumawag po sa number ng father ko at sabi nila may balance daw po akong 9000 pesos. Today naman nkakareceive po ako ng letter from Mr. Russel D. Belmonte Counsel for Keycash and Paylite Lending Inc. na may outstanding loan obligation in the principal amount of 6000, exclusive of interest s and penalties. Binigyan po ako ng five days to pay upon receipt of the letter or else they will file estafa case against me. Pananakot lang po ba Ito or possible po na makasuhan ako kahit wala naman po akong natanggap na pera galing sa kanila?
hi..i just wanna ask..how do we know if the lending company is legal?what are the things that we need to do if the lending is not registered? i borrowed some money from a lending companies but not sure if that is legit and the interest is too high. i used that money to get here in canada is like a placement fee. i hope to hear some idea or answer from you. Thank you!
Good day atty.
Tanong lng po ako ngloan po ako sa isang lending company. Worth 20k lng po. 1 year to pay. Ofw ako dati kaya lng umuwi ako for ppersonal reason. Kaya 2 months po d ako nakabyad. Binigyan nla ako n palugit kaya ln kapus talaga n ask ako another 4 days lng kc delay yong padala s akin. Pero ayaw n kausap ko na agent ang daming sinabi sa akin. Sinabihan ako na ang kapal ng mukha ko masama ugali ko kc bat wlang tao ngpapahiram sa akin P7100 lng yong overdue ko. Do i deserve all this words even nakiusap ako na bgyan ako ng 4 days.
Sinabihan pa ako ipablock dw nila ako sa NBI para d na makabalik? If d ako maka byad ngayon..
Maraming salamat po need ko ln advice kc mgbabayad namn talaga ako…
Hi, i am having the same issue with Doctor Cash, i initially loan for 8K. Nagka financial problem din ako so na prolong ang payment q sa knila..every month aq ngbabayad ng prolongation, then one day i realized na bayaran q na sna in full, when i asked them after all the prolongation, interest at penalty lng pla bnabayaran q & pag i sesettle na pla ng full, yung initial amount prn babayaran ko na my interest pa din..if i calculate lhat ng nabayad q ng prolongation eh sobra sobra pa sa 8K..ngaun po they sent me an email as well as text message pra sa court & to ceased my property..
Tama po ba ito? ano po ang dpat gawin?
Good day atty,
Yung kapatid ko po kasi may inutangan 10% ang tubo taga linggo pero sa tao lang po at wala na man po syang lisennsya sa negosyo nyang pautang, tapos isang beses lang po hindi nakabayad ay sobrang galit na po.. sang sabi eh ipapa pulis daw po…Ano po ba ang kailngan naming gawin atty,,,Salamat po…
Hi Atty.,
I applied for Cash2Go from Metrobank. I was charged for 2mos amortization already but I still didn’t receive the actual money. They told me that the check is with the courier. I asked them to cancel the loan and they said that it can only be cancelled under 2 conditions – 1st delivered-refused by receiver or 2nd undeliverable-return to sender. I find this very unfair and unjust. They gave me a very unfavorable option. Also, I didn’t get any written statement of the loan details not until I received my credit card bill. I get my credit card bill around the 13th, 14th or 15th of the month. The loan was approved on June 3 and the monthly amortization also took effect on that same date. Can the bank be cited for violating this act?
Please advise sir. I really need legal advise.
Sincerely,
Diggy