Finance
The Truth in Lending Act (TILA) requires lenders to disclose the annual percentage rate (APR). The APR is:
AAlways equal to the stated interest rate on the loan
BThe true cost of the loan expressed as a yearly rate, including fees and charges✓ Correct
CThe interest rate charged on unpaid balances only
DThe rate used to calculate the monthly escrow payment
Explanation
The APR represents the true cost of credit as a yearly rate, including the interest rate plus fees, points, and other loan costs. It allows borrowers to compare loan offers on an equal basis.
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