APR is a term heard frequently when referring to consumer purchases. APR is a term that has to be disclosed in nearly all consumer credit transactions. A common example is the purchase of a vehicle. APR is actually the cost of credit and it is not an interest rate. APR has nothing to do with the state interest rate. The APR could actually include costs such as a credit report fee or a loan origination fee. Proper disclosure of the APR is very important so that the consumer knows what the actual cost of credit is. For example, the APR should help you to understand how much you are actually paying to buy a car on credit.
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