An annual percentage rate of charge or annual percentage rate of charge is a numerical number that is used to express the cost of borrowing. This is the annual amount that a consumer will have to pay for the purchase of a loan or other type of loan. According to the law, lenders are obliged to fully disclose the annual percentage rate to consumers.
The law that requires the disclosure of borrowing costs is called the Truth in Lending Act. Originally enacted in 1968, the Truth in Lending Act was introduced as part of the Consumer Protection Act. in 1980, it was reformed and simplified within the framework of the Deregulation and Currency Control Act on Deposit Institutions.
The intended function of the APR is to allow consumers to compare loans and determine which loans or other types of loans are the most cost-effective. The APR is designed to make it harder for lenders to hide fees while promoting low interest rates. In essence, the annual percentage rates pave the way for the very competitive credit market and help consumers to make informed credit decisions.
APR is the abbreviation for the equivalent annual interest rate and a financial term that is very often used to determine the interest rate of various financial products. Both from savings deposits and from lines of credit, since this is always done in the same way. It is the true expression of the cost o effective yield annually of a financial product regardless of its maturity. To the point that on more than one occasion they checked their ratios to determine the convenience of the operation or not.
If you are looking for a personal credit, a term tax or even a dividend yield on the stock exchange, you have certainly set the amount of the annual interest rate or an equivalent annual interest rate for yourself. Because this is a very important factor in the expenses or savings that you have for the selected financial product and which are generally regulated by the monetary authorities. A very important aspect is not to confuse it with the TIN since it is not the same thing. Because the TIN is a fixed percentage that the bank receives for allocating the money, although at some point it can confuse you.
But do you really know what APR is, what it is for and how it is calculated? Below we will explain all the questions you may have about this financial term, so that from now on you can choose the best financial product and, of course, the one that interests you the most at all times. Because you should also know that this important rate it is not always the same and it varies depending on different parameters that can make its calculation more complex. It is perhaps the biggest problem that it entails for its correct understanding.