The Truth-in-Lending Act (15 U.S.C. §§1601–1604 (1982)) requires the uniform disclosure of the…

The Truth-in-Lending Act (15 U.S.C. §§1601–1604 (1982)) requires the uniform disclosure of the interest rate to borrowers in a readily intelligible form. Assume that before the act, there was uncertainty among borrowers about the true level of the interest rate, but that after the act, that uncertainty is reduced. What effect on the amount of borrowing would you predict from passage of the act? Would there be disproportionate effects on the poor and the rich? Why? Does the act increase the marginal cost of lenders? Does it reduce the profits of lenders?

 

 

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