Question

APR and EAR - Should lending laws be changed to require lenders to report EARs instead of APRs? Why or why not?

Answer 1

YES, lending laws should be changed to acquire lender to adopt EARs instead of APRs because annual percentage rate will not be providing relevant rate which is appropriate for valuation and the only advantage they are providing is they are easier to compute but with the changing global scenario and the competitive environment, it is better to adopt EARs as it will be providing with the effective annual rate and that will be relevant and it will be also eliminating the benefit of annual percentage rate by use of the computerized system which will be eliminating the ease of computation.