Carleton, Inc.
Consumer Lending Software

Contemplating the APR

2013 has begun with a deluge of questions, issues, and investigative queries from a diverse cross-section of lenders in the consumer finance industry about the specifics of proper APR computations.

The "devil" is in the details and the recent plethora of issues presented had indeed "drilled-down" to the very unique and peculiar properties of Appendix J to Regulation Z and the accompanying definitions of terms and concepts.

Remember that Appendix J was created to serve as the "how to" for APR calculation to fill a void left by the original Regulation Z that described the concept of the APR but left too much regarding the detail level nuts and bolts issues open to interpretation.

It was also formulated during the late 1970's when the vast majority of calculations were fairly generic and repayment was primarily monthly in nature. Those factors definitely influenced the viewpoint of the Consumer Affairs Committee in creating Appendix J.

Some random thoughts concerning the issues currently creating a buzz in the consumer finance industry:

Posted on Feb 12, 2013