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Missoula Home Buyers - OMG Watch Out for Lurking APR Predators
This is a great explanation of Annual Percentage Rate from Bill Ladewig for Missoula or Western Montana Home Buyers.

APR Predators and APR Demystified
First, lets demystify Annual Percentage Rate (APR).

APR was designed to allow consumers to use one standardized number to compare the real cost of each lender's interest rate and it works like this.
If I lend you, $10,000  and, I charge a $500 Bump-ta-Bump Fee, you will actually receive $9,500, however you must still repay me $10,000.  APR is my real yield and your real cost on this loan.
We agreed that you will repay the loan at 8% interest on $10,000, HOWEVER you only received $9,500 therefore I will earn more than the 8.0% interest rate I charge on $10,000.  In this case, my yield (APR) is 9.799% on the $9,500 you received.   
APR is the lender's yield on dollars actually lent ($10,000 minus $500 = $9,500); in this case, the lender's yield (APR) on $9,500 is 9.799%   (APR is computed as if the above example is a 30 year loan)
The $9,500 also represents the Amount Financed in the Truth In Lending (TIL) disclosure. 
For those of you who use spreadsheets the Rate Function will find APR.  Use the Amount Financed for Loan Amount and use the monthly payment on the actual loan amount.
Fees ... more

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