APR (Annual Percentage Rate)
The yearly cost of borrowing, including the interest rate plus most fees, expressed as a single percentage.
What does apr mean?
APR rolls a loan’s interest rate together with points and required fees into one annual figure, so it’s usually a little higher than the note rate. Because it captures the true cost, APR is the right number to compare loan offers — though it assumes you keep the loan to term.
Put it to use
APR — frequently asked
What is the difference between APR and interest rate?
The interest rate is the raw cost of borrowing the principal; APR is broader, folding in points and required fees on top of that rate. APR is therefore usually a bit higher, and it is the fairer number for comparing two loan offers.
Does the lowest APR always mean the cheapest loan?
Not always. APR assumes you keep the loan for its full term, so if you plan to sell or refinance early, a loan with a lower rate but higher upfront fees can cost less overall. Compare both the APR and the out-of-pocket fees.