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How to Pick the Best Loan after Knowing APR?

In reality, the federal disclosure law creates a useful loan comparison tool. You can have two lenders, A and B, who quote the same interest rate—say, 6 percent. But when you get their good faith estimates, lender A’s APR is 6.29 percent and lender B’s is 6.39 percent. Obviously, lender A’s loan will cost you less and is likely to be the better choice.

The best way to compare loans is to get good faith estimates from two or three lenders and compare the costs, line by line. Note where one lender is higher on one item but lower on another. Finally, compare the APRs, and the lowest percentage is the cheapest loan.

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