The cost of credit on a yearly basis, expressed as a percentage.
A loan's annual percentage rate, or APR, is what credit costs you each year, expressed as a percentage of the loan amount.
The APR, which is usually higher than the nominal, or named, rate you're quoted for a loan, includes most of a loan's up-front fees as well as the annual interest rate.
You should use APR, which is a more accurate picture of the cost of borrowing than the interest rate alone, to compare various loans you're considering.
- Browse Related Terms: Adverse Action Notice, Annual Percentage Rate (APR), Credit application, Discount rate, Federal Open Market Committee (FOMC), Finance Charge, interest, Interest rate, Money factor, Origination fee, Periodic interest rate, Prequalification, Prime rate, Regulation Z, Right of rescission, Truth-in-Lending Act
The actual cost of credit to the borrower, including interest and certain other charges, expressed as a yearly rate. Determining the APR’s for two products permits consumers to comparison-shop for credit.
- Browse Related Terms: Annual Percentage Rate (APR), Closing Costs or Settlement Fees, Consummation, Credit Card, discount points, Finance Charge, interest, Loan origination fees, Origination fee, Points and Origination Fees, Principal
- For credit cards, the APR is the cost of credit expressed as a yearly interest rate. Each billing period (usually about a month), the company charges a fraction of the annual rate, called the periodic rate.
APR or “annual percentage rate” is an annualized interest rate. Different APRs may apply to different balances on your account, such as your purchase balance or your cash advance balance. We use the APR that applies to each balance to calculate the interest that you owe us on the account.
- Browse Related Terms: Annual Percentage Rate (APR), Balance Transfer, Balance-transfer fee, Cash-advance fee, Interest rate, Membership fee, Participation fee
The cost of credit expressed as a yearly rate. For closed-end credit, such as car loans or mortgages, the APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay. An APR, or an equivalent rate, is not used in leasing agreements.
- Browse Related Terms: Annual Percentage Rate (APR), application fee, appraisal fee, HUD-1 Uniform Settlement Statement, Loan origination fees, point, Points (also called discount points), Prepayment penalty/prepayment premium, Unpaid Principal Balance (UPB)
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