Final answer:
The law that ensures lenders use an APR (Annual Percentage Rate) so that borrowers have the information they need to make informed comparisons is the Federal Truth in Lending Act (TILA). TILA requires lenders to disclose the APR in loan agreements, allowing borrowers to compare the costs of different loans.
Step-by-step explanation:
The law that ensures lenders use an APR (Annual Percentage Rate) so that borrowers have the information they need to make informed comparisons is the Federal Truth in Lending Act (TILA). TILA requires lenders to disclose the APR in loan agreements, allowing borrowers to compare the costs of different loans.
For example, if a borrower is considering two different loans with different interest rates, the APR takes into account other charges and fees associated with the loan, giving the borrower a more accurate picture of the overall cost.
By providing this information, TILA helps borrowers make better decisions and understand the true cost of borrowing.