The annual percentage rate (APR) was established by which legislation?

The annual percentage rate (APR) was established by the Truth-in-Lending Act of 1968. This legislation was created to promote informed consumer decision-making in credit transactions by requiring lenders to disclose the cost of borrowing in a standardized, understandable format. The APR is a key part of this transparency, as it expresses the total annual cost of borrowing as a percentage of the loan amount, including interest and any required fees, thereby allowing consumers to compare the costs of different loan products easily.

While other pieces of legislation mentioned also contribute significantly to consumer protection and transparency in financial transactions, they focus on different aspects. For example, the Real Estate Settlement Procedures Act is primarily concerned with the settlement process and disclosure of settlement costs; the Equal Credit Opportunity Act prohibits discrimination in lending but does not specifically address APR; and the Home Mortgage Disclosure Act requires lenders to provide information about their mortgage lending practices but, again, does not establish the APR. Thus, the foundation for the APR as a concept and requirement originates specifically from the Truth-in-Lending Act of 1968.