Finance
The Truth in Lending Act (TILA) requires lenders to disclose the Annual Percentage Rate (APR), which differs from the interest rate because the APR:
AIs always lower than the interest rate
BIncludes the interest rate plus certain loan fees, giving a true cost of credit✓ Correct
COnly applies to commercial loans
DIs set by MREC
Explanation
TILA's APR disclosure includes the interest rate plus certain costs (points, origination fees, mortgage insurance) expressed as an annual rate. This gives borrowers a truer picture of total borrowing cost for comparison.
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