AAPR stands for Average Annual Percentage Rate. It is a measure of the total cost of a loan, including interest, fees, and other charges. The AAPR is calculated over a seven-year period and is expressed as a percentage of the loan amount. The AAPR is a useful tool for borrowers to compare different
loan options and to make sure that they are getting the best possible deal. It is also a useful tool for lenders to ensure that they are charging borrowers a fair price for their loans.
The AAPR is calculated using the following formula: AAPR = (Interest + Fees + Other Charges) / Loan Amount The
interest rate is the most significant component of the AAPR. The fees and other charges can vary depending on the lender and the type of loan.
The AAPR is a useful tool for
borrowers to compare different loan options and to make sure that they are getting the best possible deal. It is also a useful tool for lenders to ensure that they are charging borrowers a fair price for their loans.
Here is an example of how to calculate the AAPR for a loan with an interest rate of 5%, an origination fee of 1%, and a monthly servicing fee of $20. AAPR = (5% + 1% + 20 / 12) = 6.25% This means that the borrower will pay an average of 6.25% interest on the loan over the course of seven years. The AAPR is a valuable tool for borrowers and lenders alike. It can help borrowers to make informed decisions about their loans and it can help lenders to ensure that they are charging borrowers a fair price.