The Cost of Credit
As a result of the Truth in Lending Law of 1969, creditors are required
to state the cost of borrowing as a dollar amount so that consumers
will know exactly what the credit charges are and can compare credit
costs and shop for the best rates.
Finance charge is the total dollar amount
you pay to use credit. It includes
interest costs and other costs such as service charges.
Annual
Percentage Rate (APR) is the percentage cost (or relative cost) of credit
on a yearly basis.
The APR is your key to comparing costs.
