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Please don't. I'm a consumer finance attorney who has worked for several years with people from all over the income spectrum who have trouble with finances. No
by mark212 13y ago
Please don't.
I'm a consumer finance attorney who has worked for several years with people from all over the income spectrum who have trouble with finances. No one -- and I mean no one, not federal judges, not banking attorneys, no one -- really understands what APR actually means. It's useful in the US, though, because it means that all borrowing products are calculated the same way, so a consumer can compare the cost of credit from one product to another and it's truly apples-to-apples.
Keep the flat interest. As you say, this is what your customers are used to and it will allow them to make meaningful comparisons with sources of credit in their own markets. An APR will only confuse people and be misleading.
For what it's worth, I'd take the one-time application fee out of the cost of credit calculation and put it down below with an asterisk, like "if this is your first loan with us, there's also a one-time fee of $11 to cover the costs of ___."
- aestra 13y agoThey can present the payment schedule table clearly so even if you didn't know what APR was, you would see "I pay this amount of interest on this day" with a total at the end of the term the entire amount of interest. This is what lenders in the US do. That's called transparency. Everything else is playing games to confused people into thinking their loan is cheaper. I can go to any mortgage calculator online and plug in some simple numbers and get a breakdown of my payments every month, interest on the payments, and total interest paid and I now know how much I am and will pay. This isn't hard, when it isn't done it is to hide information from the consumer. That's like saying nobody should save because nobody understand compound interest. It is true that hardly anyone understand compound interest (and how amazing it is).