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| Author: | Lee, J. Hogarth, J. |
| Title: | The price of money: consumers' understanding of APRs and contract interest rates |
| Journal: | Journal of Public Policy and Marketing
1999 : SPRING, VOL. 18:1, p. 66-76 |
| Index terms: | PUBLIC POLICY MARKETING CONSUMERS |
| Language: | eng |
| Abstract: | Both the contract interest rate and the annual percentage rate indicate the price of a loan. Consumer's understanding of these two measures of the price of closed-end consumer loans was examined using the 1997 University of Michigan Survey of Consumers. Among the mortgage borrowers, at least 40% of respondents failed to understand the relationship between these two price measures; education, quantity and quality of information search, and region were found to influence their understanding. The authors draw implications for improving information disclosure in consumer credit markets. |
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