LOOK HONEY - THE APR IS ONLY 1800%!

Annual Percentage Rate (APR)- The annualized cost of credit expressed as a percentage, considering all the added cost of a given loan.

Understanding of this term and it's related circulations are essential Loan Officer knowledge but have you ever stopped to think about the APR we pay on a typical ATM transaction?

A $100 withdrawal from an ATM machine with a $2 fee that gets spent in one week comes out to a whopping 104% APR and if that ATM has a $5 fee and the money is spent in 24 hours (think Casinos here) the APR is a staggering 1820%. That's right, one thousand eight hundred twenty percent!

Understandably, most of us will happily pay the price of convenience for an ATM and the fees or finance charges on $100 are insignificant. However, what about a mortgage with high up front frees that ends up being paid off in a short period of time?

This, my friends, is one of the financial pitfalls that you are responsible for helping your customers avoid. Tomorrow we will look at some real life examples and how you can help your customers avoid paying too much!