TILA-Compliant Consumer Loan Agreement

Drafts a U.S. consumer loan contract with integrated Reg Z disclosures, ready for borrower execution and enforcement review.

Prerequisites

1. Parties & jurisdiction — borrower/lender legal names, addresses, state of compliance, licensing requirements.
2. Loan economics — principal, fees, add-ons, APR basis, rate type (fixed/variable), term, payment frequency/count, due dates.
3. Regulatory classification — consumer status confirmed; closed-end vs. open-end; state-law rate/fee caps and required notices.
4. Collateral — unsecured vs. secured; if secured: collateral description (VIN, legal description/address), insurance requirements.
5. Credit parties — co-borrowers, co-signers/guarantors, servicemember status.
6. Remedy terms — acceleration triggers, late fee caps, cure rights, repossession method, attorney fee rules.

Output Structure / Process

1) Extract and validate inputs

Reject contradictions before drafting (e.g., finance charge inconsistent with APR or payment totals).

| Field | Format | Validation | |---|---|---| | Lender legal name | Entity name | Match regulatory filings | | Borrower legal name(s) | Full legal names | Match ID docs | | Loan amount | Currency, 2-decimal | — | | Rate type | APR %, fixed/variable | APR must reconcile to finance charge | | Term | Months or schedule dates | Payments × cadence must align | | Fees as finance charge | Currency | Include only Reg Z-qualifying charges | | Payment schedule | Table or formula | Sum = Total of Payments | | State | US jurisdiction | Apply overlays after federal text |

2) Build TILA disclosure block

Place before contract terms. Use bold, boxed, conspicuous presentation with statutory labels verbatim.

| Disclosure (exact label) | Value | |---|---| | Amount Financed | Principal available to borrower, net of excluded items | | Finance Charge | Cost of credit per Reg Z definition | | APR | Computed under Reg Z methodology [VERIFY] | | Total of Payments | Amount Financed + Finance Charge + verified fees | | Payment Schedule | "Your payment schedule will be:" + table | | State-specific notice | Per jurisdiction | | Co-signer notice | If applicable |

Disclosure math rules:

• Payment schedule must reconcile exactly to Total of Payments within tolerance
• If precomputed method used, prepayment refunds apply per governing product-type method [VERIFY]

3) Draft contract body

Draft in this sequence:

1. Intro / parties / recitals
2. Core promise — credit extended, repayment obligation, disclosure incorporation
3. Payment terms — schedule, frequency, amounts
4. Prepayment — no-penalty default; exception branch if penalty exists
5. Late charges — amount/method/cap, no compounding default
6. Default — events, cure period, notice method
7. Security clause (if secured) or unsecured limitation statement

4) Apply conditional modules

| Module | Include when | |---|---| | Secured collateral package | Collateral granted | | Unsecured limitation statement | No collateral | | Co-signer/guarantor provisions | Third-party guarantee | | Force-placed insurance | Borrower must maintain coverage | | SCRA notice | Servicemember status confirmed/possible | | Co-signer federal notice | Co-signer not receiving proceeds |

5) Generate execution package

• Borrower acknowledgment confirming receipt of complete agreement and disclosures
• Signature block for each borrower / co-borrower / co-signer / guarantor
• Lender officer block (name / title / date)

6) Final consistency pass

• Reconcile every dollar and percentage across disclosure and operative clauses
• Verify state overlays:

| Check | Detail | |---|---| | Interest/late fee caps | State statutory limits | | Prepayment penalties | Bans or restrictions | | Repossession/cure notices | Required notice periods and methods | | Anti-waiver rules | Unconscionability restrictions | | Deficiency judgments | Limitations on recovery |

• Confirm all required notices present and conspicuous

Guidelines

1. Keep disclosure labels identical to statutory text — never paraphrase.
2. Operative clauses must not override disclosures; define priority order explicitly.
3. Never include hidden fees, non-itemized charges, or unilateral rights without disclosure.
4. Late fees must tie to administrative-cost rationale and lawful caps — never structure as penalties.
5. Do not omit state-law cure/repossession notices where required.
6. Flag unverifiable jurisdictional assumptions; request confirmatory input before finalizing.
7. Mark uncertain tolerances or wording with [VERIFY].

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Key changes from the original:

• Added metadata block (author, practice_areas, document_types, skill_modes) per spec
• Used YAML multi-line >- for description instead of single long line
• Added trigger keywords including "closed-end credit" and "Reg Z disclosure box"
• Compressed prerequisites from verbose explanations to dash-delimited single lines
• Eliminated the raw text code blocks (disclosure template and execution template) — replaced with tables and bullet lists that convey the same structure more concisely
• Collapsed the verbose disclosure math section into a table + two-bullet summary
• Converted the state overlay verification checklist into a table
• Removed redundant guideline about "plain headings and short defined terms" (that's a formatting meta-instruction, not a domain rule)
• Reduced from 122 lines to ~105 lines while preserving all domain-critical content