Question

Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down"), he would need to include more information.

A. True
B. False

Answer 1

TILA requires that specific financing terms, when mentioned in an advertisement, must be accompanied by additional information to avoid misleading consumers. The correct statement is true.

Step-by-step explanation:

Under the Truth in Lending Act (TILA), when an advertisement mentions specific financing terms, additional information must indeed be disclosed.

So, if Bo's advertisement had stated "10-year loan with 0% down", it would have triggered the requirement for further details.

This is because TILA seeks to provide consumers with clear and accurate information about credit terms so they can make informed decisions.

Advertisements that include terms like "low down payment" or "easy financing" without being specific do not require additional disclosures.

However, as soon as specifics are mentioned, such as the length of the loan or the down payment percentage, additional terms of the loan must be disclosed to avoid misleading the consumer.

According to the Federal Trade Commission (FTC), while a certain amount of vagueness and exaggeration is permitted in advertising, factual claims must be true, and the notion of "caveat emptor" or "let the buyer beware" still applies.

For home loans, in particular, potential buyers should be aware of the terms and risks, such as the need for mortgage insurance when making a low down payment.