What is APR?

@tess.kassulke 

APR stands for Annual Percentage Rate. It is a measure used to express the annual cost of borrowing money, including both the interest rate and certain fees or costs associated with the loan. APR provides a standardized way for consumers to compare the costs of different financial products, such as loans or credit cards, and make informed decisions about borrowing.

@tess.kassulke 

APR takes into account not only the interest rate charged on the loan but also any additional fees or charges that may be associated with the loan, such as origination fees, closing costs, or annual fees. By including these costs, APR gives borrowers a more accurate representation of the true cost of borrowing over the course of a year.

APR is expressed as a percentage and represents the total cost of the loan on an annual basis. It allows borrowers to compare different loan offers and determine which one is the most cost-effective. For example, if one loan has a lower interest rate but higher fees, its APR may be higher than a loan with a higher interest rate but lower fees.

It's important to note that APR does not take into account other factors such as prepayment penalties, variable interest rates, or changes in loan terms over time. Therefore, it is still important for borrowers to carefully read and understand the terms and conditions of a loan agreement before making a decision.