What are the known problems with APR?
There are several. Problems arise when lenders use different methods of calculating APR or different loan assumptions. Even though the APR calculation should be standardized for all lenders, in practice it isn’t. Also, someone with a 5% down payment will have a higher APR than someone with 10% down even though their actual interest rates are the same. Someone using a title company with lower closing costs will have a lower APR. Loans closing on different days of the month will have different APR’s. All of this makes APR very confusing to most people.
