A local finance company quotes an interest rate of 15.4 percent on one-year loans. So, if you borrow $37,000, the interest for the year will be $5,698. Because you must repay a total of $42,698 in one year, the finance company requires you to pay $42,698/12, or $3,558.17 per month over the next 12 months. It asks if 15.4% is the interest rate and the answer is no. What I am looking for is what rate would legally have to be quoted (APR) and the EAR?