Understanding APR

APR stands for Annual Percentage Rate. It is designed to show the yearly cost of credit and may reflect more than the stated interest rate alone.

Why APR matters

APR can help borrowers compare the overall cost of borrowing across different loan options because it may account for both interest and certain fees.

APR vs. interest rate

The interest rate is the cost charged on the unpaid principal balance. APR is broader and can provide a more complete picture of cost.

Questions to ask

• What APR applies to my loan?
• Are there origination fees?
• What are the monthly payments?
• What is the total amount repaid if I keep the loan for the full term?

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