The interest rate prices the borrowed principal. APR is designed to express the yearly cost of credit and can include certain mandatory finance charges. Compare APR to APR, then read the finance charge and total of payments before signing.
What is happening underneath
A monthly payment can stay attractive while the term grows or financed charges are added. The Truth in Lending box turns the pitch back into comparable numbers.
Find thisAPR in the federal disclosure
Then thisFinance charge over the full term
Do not missAmount financed and total of payments
Your three moves
- Get the disclosure before signing.
- Compare the same term and down payment across offers.
- Ask why APR and the stated rate differ.
Use this sentence
“Please show me the APR, finance charge, amount financed, and total of payments on one page before I agree.”
What to watch for
Do not compare one lender's rate with another lender's APR. Use the same number and the same term.
Official starting points
Rules, programs, and deadlines can change. Start with the current official pages below and the documents in front of you.