APR & Interest Rates

Let’s go back to the Terminology. What is the difference between your annual percentage rate (APR) and your Interest Rate?

This will come on your Truth in Lending (TIL) disclosure, and quite often the APR is higher than the actual note rate, or the actual quoted interest rate. The initial interest rate is located on page one of the 2010 Good Faith Estimate in the “summary of your loan” section. This is the note rate, or the rate that you were quoted. You may or may not be locked at this rate. The rate in the upper left hand corner of the TIL is also known as the APR. The APR is different from your note rate or the rate that you were quoted. The APR includes, in addition to interest, some of the additional costs of obtaining your financing. Simply stated, if there were no costs in obtaining your financing, your note rate and APR would be the same.

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