Finance
The Truth in Lending Act (TILA) requires lenders to disclose the annual percentage rate (APR). The APR differs from the note rate because:
AAPR is always lower than the note rate
BAPR includes the note rate plus certain fees, reflecting the true cost of credit✓ Correct
CAPR applies only to adjustable-rate mortgages
DAPR is the rate used to calculate the monthly payment
Explanation
The APR incorporates the interest rate plus prepaid finance charges (points, origination fees, PMI) expressed as a yearly rate, giving borrowers a more accurate picture of the loan's total cost.
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