Protections when applying for a loan

Interested in learning more about your protections when applying for a loan? Read our blog about it here:

Applying for a loan can be a big decision in one’s life, so make sure you know what rights and protections you are guaranteed when applying for one. The federal government has passed several acts concerning this exact subject, specifically because of how little protection there used to be everyday people who were applying for loans.

The Truth in Lending Act requires lenders to disclose certain terms on many kinds of loans to borrowers when they are applying for a loan. These disclosures include the annual percentage rate of the loan, the number of monthly payments that will be required to pay back the loan, as well as items like how much money is being borrowed, how much it will cost to pay back the money, and other similar information.

Another protection extended to borrowers applying for a loan comes from the Equal Credit Opportunity Act (“ECOA”), which prohibits a lender from discriminating based on race, color, religion, national origin, sex, marital status, or age when considering extending credit. If a lender does deny a potential borrower a loan based on one of these characteristics, then, depending on the kind of loan involved, one of a number of different federal agencies may report the violations to the Department of Justice.

In addition to these protections provided when a borrower is applying for a loan, the ECOA requires several pieces of information to be provided when a lender denies a credit application. First, qualified lenders have to give written notice of their decision taken on the potential borrower’s application, including, at a minimum, the primary reason for denying the loan. Lenders are also required to inform the borrower that they have a right to review the decision to deny the loan.

If you have any questions about loan application protections, please contact McNeelyLaw LLP by calling (317)825-5110.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.