What does the acronym APR stand for in the context of Truth in Lending?

The acronym APR stands for Annual Percentage Rate in the context of Truth in Lending. This term is crucial because it reflects the total cost of borrowing expressed as a yearly interest rate, which allows consumers to understand and compare the cost of different loan offers easily. The APR includes not just the interest rate on the loan but also incorporates other financing charges and fees associated with the loan, providing a more comprehensive picture of what the borrower will actually pay over the course of the year.

This helps ensure transparency and enables consumers to make informed decisions when evaluating loan options. By using APR, lenders are required to present borrowing costs in a standardized way, which aligns with the principles of the Truth in Lending Act that aims to protect consumers in their borrowing decisions.