Certified Medical Administrative Assistants (CMAA) Practice Exam 2026 - Free CMAA Practice Questions and Study Guide

The Federal Truth in Lending Act is designed to promote informed use of credit by requiring disclosures about its terms and cost. This legislation applies specifically to businesses that charge interest or permit payment plans exceeding four installments. It mandates that lenders disclose key information such as the annual percentage rate (APR), terms of repayment, and the total cost of credit. This ensures that consumers are fully aware of the financial implications before agreeing to a credit arrangement.

In contrast, the Fair Debt Collection Practices Act focuses on regulating the practices of third-party debt collectors to protect consumers from abusive and misleading practices. The Bankruptcy Reform Act pertains to the process of bankruptcy and how debts are handled legally when an individual or entity files for bankruptcy. The Equal Credit Opportunity Act prevents discrimination in credit practices, ensuring equal treatment in lending but does not specifically relate to the charging of interest or payment plans. Thus, the Federal Truth in Lending Act is the legislation that directly addresses the scenario of businesses charging interest or allowing more than four service payments.