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 ano po ngyari sa dr. cash loan nyo same situation with me po .. pls reply tlga po bng pumupunta cla sa house?
gud am..nid ko po advice regarding sa utang..may nahiram po kming 400k year 2011at until now 2017 binabayaran pa namin at umabot na po ng 1.2 milyon ang naihuhulog namin at ayaw pong makipag usap ng inutangan pra mlaman nmin kung bayad nba kmi..ano po ang dapat naming gawin..5% po ang interes a month legal po ba un..
hi atty, thank you for this site. There is a deped order governing the grant of provident Fund Loans to deped employees stating (under its section x.10) that the loan shall have an interest rate of six percent (6%) per annum, add-on and straight computation. Is this method allowed under the lending act? Thank you and more power.
Query lng po atty. my inutangan po akong private person pinambayad ko sa tuition ng anak ko mga 12k at dahil hindi pa po nakabalik ang asawa ko sa barko misan po hindi ako nakakabayad, pagnagbibigay naman ako sinasabi nya kulang pa daw sa interest yong binibigay ko, hindi po bababa sa 1000 ang binibigay ko sa kanya…. binigyan nya ako ng listahan nagulat ako at 1% per day po ang tubo umabot na po 30k ang utang ko… ngayon po ipina barangay nya ako… naka sched po kmi magkita nextweek… Tapos po kong sino-sino po ang pinagsasabihan nya na my utang ako at ipapa barangay nya po ako… pati po ang capitan sa kabilang barangay pinakitaan nya ng listahan ng utang ko ng my inireklamo dn sya na officemate ko… pati sa social media pinatatamaan nya lahat ng my utang sa kanya….
ano pa ba ang dapat kon gawin pagnagkita na kmi sa barangay atty?
hi po….kumuha ako ng credit items worth 19+k sa Acer store sa SM Mall at ang home credit na nka base sa Sm Mall ang nag handle ng payment sa Acer ng nakuha ko…for short…sa home credit po ako magbabayad monthly….pinag down po nila ako ng 6k at sinabi naman po na…(hindi ko,po matandaan if..) ibabawas nlang sa kabuuang nakuha o idadagdag po ang 6k sa kabuuang naibayad ko po.. ang alam ko po…sa ngayon po eh nsa kabuuang 21k na ang naibigay kong lhat …isinama ko na po dyan bale ang 6k na nauna kong idinown….nalaman ko po na ang kabuuang babayaran ko po pla is 29k… … imagine…sa actual 19k na halaga ng nakuha ko sa Acer ay may patong na po na tubo ung Acer di po ba? at since credit item nga po ito at ang Home credit ang naghandle…eh tinubuan din ulit nila ako ng 10k??? kya ang total 19k eh ngayon, bbyaran ko na ng 29k..kung tutuusin…nkabayad na ko ng 21k..eh bayad na ho ako sa 19k na pagkakautang ko at may tubo na nga sila na 2k doon…kung sa credit card po ako kumuha…bale 1k lang sa kabuuan ang tubo nila sa makukuha mo sa credit card… tpos po since hindi nga ako nakakabayad pa ulit sa ngayon…alam nio ba na patuloy din at palaki ng palaki ang penalty at tubo ng delayed payment o di ko pagbabayad muna sa kanila na patuloy nila idinadagdag sa balanse ko…ang tanong ko po..Tama ho ba na ganoon kalaki ang bayaran ko…dagdag na 10k?..eto pa…ng di na muna ako nakabayad kasi po may iba po muna akong inuunang bayaran..andyan yung harasin na nila ko sa pagtawag sarcastic na mga agents nila…nagbabanta ng pagdedemanda laban sa akin at kesyo pupuntahan ako sa aking trabaho …pangalawa po ng hindi na ako nagreresponse sa kanila..kung sino sinong tao,na kasama ko sa trabaho at kakilala ko na hindi ko malaan kung papaano nilang nakuha ang mga nos. nila eh yun po ang kinukulit nila…kumukuha ho sila ng info at kung ano anong mga salita ang binibitiwan laban sa akin kaya nmn sa ngayon nagagalit sa akin yung mga taong kinokontak nila kasi bkit ko daw ibinigay ang nos. nila tuloy sila itong kinukulit… masyado na po akong napapahiya at nahaharas nila…payuhan nio ako pls.
Yung asawa ng kapatid ko umutang sa leanding ng 25k and 20‰ ang patong nya,ngyon almost ilng buwan na tpos na syang mag bayad and ang nbbyad na nya ay halos 16k this month last payment nya ng 1600 d sya agad nakapag bayad ng 2days pinabarangay sya nung leander na may kamag anak sa barangay namin. Paano po ang dapat na gawin nmin dto.thanks po.
Hello Sir, magtanong lang sana ako. Is it ethical to collect in advance the 1 year interest of a certain loan? Is there a law prohibiting such practice?
totoo po ba na nagpupunta ang doctor cash na ngaun ay moola lending na sa bahay to file a complain with brgy officials. Please kelangan ko po sagot ninyu. They are threatening me to du such visit kahit nag extend na ako.
Good Day po,
May tanong lang po regarding housing loan, Bumili po kami ng house sa V.V. SOLIVEN GROUP OF COMPANIES at pinasok po namin sa bangko (UCPB) for bankloan.. nagkaproblema po kasi nagrelease po ang bangko ng Final Release pero hindi pa po tapos ang Bahay na kinuha namin at hindi pa natuturnover sa amin. Nabasa ko po kasi dun sa kontrata na mag final release lang sila pag 100% tapos na ang bahay. Lagpas 1 year na po pero wala po aksyon ang DEVELOPER at naghuhulog na kami ng aming amortization monthly sa bangko. Ano po ang dapat namin gawin? na subukan nadin namin lumapit sa HLURB ang kaso matagal din po magreply.. na frufrustrate na po kasi kami hindi namin mapakinabangan ang bahay at nahirapan na kami mag trabaho abroad para lang mabayaran ito ngunit hanggang ngayon wala kami napapala.
Gud pm po inquire ko lang po may nangutang po skin na umabot ng 1M mahigit at ng kumprontahin ko po sila ay sinabi niya na may ibang gumamit o pinautang din sa iba sa ngayon wala na po akong nakuhang tubo ng pera ko .5 lang po ang pinapatong kong interest 3taon na po ang business kong ito ngayon lang po nahkaproblema anonpo ang gagawin ko kung may laban po ako kung magdedemanda ako