A local finance company quotes a one-year loan at an interest rate of 18 percent. So, if you borrow $19,000, the interest for the year will be $3,420. Because you must repay a total of $22,420 in one year, the finance company requires you to pay $22,420/12, or $1,868.33, per month over the next 12 months.
What rate would legally have to be quoted? APR
What is the effective annual rate?