What is the primary purpose of Regulation Z?

The primary purpose of Regulation Z, established as part of the Truth in Lending Act, is to protect consumers in credit transactions. This regulation aims to promote informed use of credit by requiring clear disclosure of the terms and costs associated with borrowing. By doing so, it empowers consumers to make more informed financial decisions, understanding the true cost of their credit obligations, including interest rates, fees, and other charges.

Regulation Z ensures that lenders provide standardized information, thus fostering transparency and helping consumers compare different credit offers. This consumer protection focus is vital in preventing deceptive lending practices and ensuring that individuals are aware of their rights and obligations when entering into credit agreements.