APR stands for Annual Percentage Rate. It represents the yearly cost of borrowing money or the yearly return on an investment, expressed as a percentage. APR includes not only the interest rate charged on the principal amount but also any additional fees or costs associated with the loan or credit product, providing a more comprehensive measure of the cost of borrowing than just the interest rate alone
. Key points about APR:
- It shows the total yearly cost of a loan or credit, including interest and fees.
- It helps consumers compare different loans or credit cards on a consistent basis.
- APR does not account for compounding interest within the year.
- It is required by law to be disclosed by lenders before agreements are signed
In summary, APR is a standardized way to express the annual cost of borrowing, allowing consumers to understand and compare the true cost of loans or credit products more easily.
