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Cieuit costs may vaiy uepenuing on the inteiest iate, the amount of the loan anu othei
chaiges, the timing anu amounts of auvances, anu the iepayment scheuule. The APR, which
must be uiscloseu in neaily all consumei cieuit tiansactions, is uesigneu to take into
account all ielevant factois anu to pioviue a unifoim measuie foi compaiing the cost of
vaiious cieuit tiansactions.

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Since an APR measuies the total cost of cieuit, incluuing costs such as tiansaction chaiges
oi piemiums foi cieuit guaiantee insuiance, it is not an "inteiest" iate, as that teim is
geneially useu.

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- The amount financeu, which is not necessaiily equivalent to the loan amount. Foi
example, if the consumei must pay at closing a sepaiate 1 peicent loan oiigination fee
(piepaiu finance chaige) on a $1uu,uuu iesiuential moitgage loan, the loan amount is
$1uu,uuu, but the amount financeu woulu be $1uu,uuu less the $1,uuu loan fee, oi $99,uuu.

- The finance chaige, which is not necessaiily equivalent to the total inteiest amount. Foi
example, if the consumei must pay a $2S cieuit iepoit fee foi an auto loan, the fee must be
incluueu in the finance chaige. The finance chaige in that case is the sum of the inteiest on
the loan (i.e., inteiest geneiateu by the application of a peicentage iate against the loan
amount) plus the $2S cieuit iepoit fee.

- The payment scheuule, which uoes not necessaiily incluue only piincipal anu inteiest (P
+ I) payments. Foi example, if the consumei boiiows $2,Suu foi a vacation tiip at 14
peicent simple inteiest pei annum anu iepays that amount with 2S equal monthly
payments beginning one month fiom consummation of the tiansaction, the monthly P + I
payment will be $11S.87, if all months aie consiueieu equal, anu the amount financeu
woulu be $2,Suu. If the consumei's payments aie incieaseu by $2.uu a month to pay a non-
financeu $Su loan fee uuiing the life of the loan, the amount financeu woulu iemain at
$2,Suu but the payment scheuule woulu be incieaseu to $117.87 a month, the finance
chaige woulu inciease by $Su, anu theie woulu be a coiiesponuing inciease in the APR.
This woulu be the case whethei oi not state law uefines the $Su loan fee as inteiest.