What Is Annual Percentage Rate (APR)?

Annual Percentage Rate (APR) is the total yearly cost of borrowing money, including interest and certain fees, shown as a percentage.

APR Overview

APR gives borrowers a clearer picture of the true cost of a loan or credit card. Unlike the interest rate alone, APR includes additional charges like loan origination fees or credit card annual fees. This makes it easier to compare financial products across different lenders. For example, a loan with a low interest rate but high fees may have a higher APR than one with a slightly higher rate but fewer fees. Understanding APR helps consumers make more informed borrowing decisions.

Key Points

• APR is the yearly cost of borrowing money, expressed as a percentage.
• It includes interest plus certain fees.
• Helps you compare loan or credit card offers.