APR stands for Annual Percentage Rate, which is the cost you pay each year to borrow money, including fees, expressed as a percentage. It is a broader measure of the cost to you of borrowing money since it reflects not only the interest rate but also the fees that you have to pay to get the loan. The interest rate, on the other hand, is the cost you pay each year to borrow money expressed as a percentage, and it does not include fees charged for the loan.
The APR is intended to give you more information about what you’re really paying, and it is required by the federal Truth in Lending Act (TILA) to be disclosed by lenders. Since all lenders must follow the same rules to ensure the accuracy of the APR, borrowers can use the APR as a good basis for comparing certain costs of loans.
It is important to note that the APR isnt always an accurate reflection of the total cost of borrowing, as it assumes long-term repayment schedules and may understate the actual cost of a loan. However, it is still a useful tool for comparing loans and determining the true cost of borrowing money.
