The main factor that determines the cost of a line of credit is the ________,which is also considered the true simple interest rate paid over the life of the loan.
A)annual merchant rate (AMR)
B)teaser rate
C)annual percentage rate (APR)
D)penalty rate

Question

Quizplus · Accepted Answer

The annual percentage rate (APR) is the true simple interest rate paid over the life of the loan and is the main factor that determines the cost of a line of credit. The annual merchant rate (AMR) is a fee charged to merchants for accepting credit card payments, while a teaser rate is a temporary, low introductory rate that may be offered to entice customers to use the line of credit. A penalty rate is a higher interest rate charged when a borrower misses payments or violates other terms of the credit agreement. Therefore, C is the best choice.

The Main Factor That Determines the Cost of a Line