Explaining APR to Customers - Richard Insley

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Explaining APR to Customers
Answer by Richard Insley, BOL Guru
BIO AND CONTACT INFO

Question: What is a good way to explain to a customer what the Annual Percentage Rate is?

Answer: It's a unit price label of the same type you find in the grocery store. Mathematically, the APR expresses the finance charge as a percentage of the usable amount financed. The math is trickier than the unit price for a box of Wheaties because the loan value the consumer enjoys is changing as additional advances increase the amount financed and payments reduce it.

First published on BankersOnline.com 9/2/03

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