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Credit costs vary from one lender to another, so think before you sign anything. Federal law requires that the lender tell you the total finance charges and the annual percentage rate or APR.
1____________________________. The finance charge includes interest costs and any other fees (such as service charges and insurance) that the seller or lender may be entitled to add to the loan.
2____________________________. For example, if someone lends you money at “only” 2.5 percent per month, the APR would be 30 percent (because 2.5 x 12 months = 30 percent).
3____________________________. He agreed to pay the principal and interest back in 10 months installments. 4________________________________.
The finance charge is the total amount you pay to use credit.
The annual percentage rate, or APR, is the cost of credit calculated as a percent on an annual basis.
Assume that a person borrowed $1000 at 10 percent interest.
In this case the APR = 28%.