Regulation Z represents the Truth in Lending Act requiring debt lenders to disclose all fees that are charged to a borrower at closing. The purpose of the Act is to provide borrowers high levels of protection from any predatory lending practices. The Truth in Lending must clearly show all fees, points, closing charges and interest charged to the borrower. The annual percentage rate, or the APR as it is commonly known, is widely considered the most important aspect of regulation Z. The APR defines exactly how much interest the borrower is charged throughout the life of a loan. The APR is always much higher than the initial stated interest rate. The reason the initial interest rate is lower than the actual APR is initial interest rates only apply to the principal amount of the loan. The APR contains all fees charged during the closing of the loan, including any adjustable interest rate loans.