Finance
Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) reflects:
AOnly the note interest rate
BThe true cost of borrowing including interest, certain fees, and other loan costs✓ Correct
CThe maximum rate the lender may charge under Arkansas usury laws
DThe rate the Federal Reserve charges member banks
Explanation
The APR includes the note rate plus certain fees (origination fees, points, etc.) expressed as an annualized rate. It allows borrowers to compare the true cost of different loan offers.
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