What is the primary purpose of Regulation Z?

Regulation Z, which is part of the Truth in Lending Act, is primarily designed to promote transparency and inform consumers about the costs associated with borrowing. This regulation mandates lenders to clearly disclose the terms of credit, including the annual percentage rate (APR), finance charges, and the total costs of the loan, allowing borrowers to make informed financial decisions.

The purpose of these disclosures is to prevent misleading advertising and ensure that consumers are fully aware of what they are committing to when entering into a loan agreement. By requiring lenders to provide clear and comprehensible information about the long-term implications of borrowing, consumers can compare different credit offers and better understand their financial obligations.

Other options do not encapsulate the essence of Regulation Z. While fair trade practices are important, particularly in lending, it is not the primary focus of Regulation Z. The mention of "truth and justice" is vague and does not directly relate to the specifics of lending disclosures. Statutes related to how homes are built fall outside the scope of Regulation Z, which is centered on credit and lending practices.