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 atty,
I had a personal bank loan and was not able to pay for several months. My account was already forwarded to the Collectors. Is it possible to charge Attorney’s /Collection Fees to me?
Thanks in Advance.
hello, po atty. I just want to ask lang po kung alin po ang tama, about sa lending weekly po kasi ang bayaran napunta po ang collector sa lugar namin ng 8 am at nakapaghulog po ng bago mag 9 am nagalit po sya at bakit late na daw po ang sagot ko po sa kanya wala pa nmang 9 tapos sabi doon na daw po ako magbayad sa office. tama po bang sinasabi ng collector? ano po ba ang dapat Atty.?
sana amy advice akong matanggap from some good Atty. thanks
Hello po mag tatanong lang po sana , meron po kasi akong niloanan isang lending company regular borrower at good payer po ako sa kanila mga maka ilang beses na po ako naka hiram sa kanila at wala pong problema kaso last year MAY 2017 nag renew po ako and suddenly sad to say nakulong po ang mister ko ng JULY 2017 by that time i was the only one who is taking care of everything like bills and i have to kids that i need to support nakiusap po ako sa kanila na huhulugan ko lang muna is yung interest which they agree pero since napaka hiram ng sitwasyun ko dahil ako lang mag isa ang kumikita at madaming gastusin pati sa mga pangangailangan ng mister ko sa loob hinde ko na din sila nababayaran pati sa interest nakiusap ako sa kanila na baka pwedeng antayin ko lang na maka luwag luwag ako at mag babayad ako kahit paunti unti nag huhulog ako pag meron akong sobra tulas ng 1000, ang tanong ko lang po tama po ba na puntahan nila ako sa opisina at ang nakaka hiya po doon ay inutos pa nila sa janitor namin na lumabas daw ako at kung hinde daw ako makaka labas ay ibigay ko nalang daw sa kanya sa ( janitor ng pinag tatrabahuan ko ) yung aking bayad . tama po ba yung ginawa nila ? pwede ba yun pag may utang ka pwede ka ng pahiyaan at maliitin sa harap ng ibang tao na hinde naman involve sa pangyayare ?
Hi Atty!
I would like to ask. Iyong loaning company po na empleyado is pumunta po sa bahay namin at pinapirma po ang lolo ko ng mga documento dahil daw may babayaran pa po raw siya na utang dahil hindi nabayad 4 years ago kaya may charges pa pero hindi po nila kami binigyan ng copies ng disclosure. Kahit na pinuntahan namin iyong opisina, ang sabi lang na hindi daw sila maka-print kasi may additional charges daw. Kawawa naman po ang lolo ko. Ano po dapat namin gawin regarding doon? from 68,000pesos they calculated it to more than 150,000pesos without giving any document copy to us. They just deducted it monthly of 17,000pesos to the pension.
Hi Magandang umaga.
Gusto ko lamang pong itanong, Umutang po ako sa isang loan corporation. Ang collateral po ay Payroll ATM kaso pina cut ko siya kasi badly needed ang pera . Nabayaran ko naman siya in time kaso dumating ako sa punto na hindi na ako nakakapagbayad. Ang natitira ko nalang pong utang ay worth 46,000 medyo matagal na po ito and im tryin to connect with them regarding the payment. Inollow nila ako to have it settled kaso i failed for the nTH time na bayaran ito. Ngayon ang sabi po sakin ay sa Law office nalang nila ako makipagusap sa may sucat at sasampahan po nila ako ng kaso.
Ano po ang maaadvice niyo sa akin?
Good evening. I just want to know if what can I do if I let another borrower used my name in borrowing money then the borrower who use my name suddenly disappear without paying the whole amount she borrowed. Because of compassion I let her used my name without thinking that she might used it for her own interest. Thus, the manager of the lending company wants to confiscate some of my properties. Give me some pieces of advice. I will wait for your response. Thank you
Hi Atty,
Hope u can help me, kc may loan me sa Doctor cash and i keep on paying the interest coz i cannot pay the loan anymore. From 5k loan now nsa Php19450 na ata and am telling them to pay in installment but they will not accept it. Nsa legal na daw and to avoid will just pay 1500 for another extension of 30 days.niloloko ko lang sarili ko kc di ko na kayang byaran ang loan sa sobrang laki na ng interest nila ts pag nagectend magbayad pa ng interest na 1500 dun pa lang sa binabayad na 1500 for the extension of loan bayad na sna me sa loan ko sa knila. Sana nman pumayag sila na byaran sila thru installment para walng ganito na di sila mbayaran.
Hello! I have a loan din po sa Doctor Cash. Way back 2016. Kaso nawalan ako ng work. 4k lang yun niloan ko so ang nakuha ko is lime 3700 kasi binawas na yun interest or whatsoever they call it. Now, ang laki na ng amount na kailangan ko bayaran. Almost 18k na. Makukulong po ba ako if ever kasi nagpapadala sila ng letter sa dati ko pang address eh sabi ko, change address na ko. Ayaw naman nila pumayag ng installment. Ayaw din nila update un address ko. Badly needed your advice.
What about fast online loans?
is it ok to have a loans with interest rate 30% per month and up?
Good day!ask lang po ako kung normal ba na harrasin ng mga online lender na ito ang mga taong malapit sayo di lang po pamilya pati mga katrabaho?sa batas pi ba natin ilan araw po ba grace petiod bago maka bayad ng utang?tama bang yun inutang mo e may bawas ng interest at pagbalik ay may tubo pa din?Ano po ba tama interest sa pagpapautang sa pilipinas?at kung ang mga online lending na ito ay legal?salamat po