APR (annual percentage rate)
APR — the annual percentage rate — expresses the yearly cost of borrowing including fees and charges, so loans with different fee structures can be compared on a single number.
Also called annual percentage rate, comparison rate
The interest rate prices the money; the APR prices the loan. Fees such as an establishment charge or a monthly account fee are folded in and expressed as an annual rate, which is why a comparison rate on an advertised loan is usually higher than its headline rate.
The gap matters most on short terms and small balances, where a fixed fee is a larger share of the total cost. A $20,000 loan at 7% over five years with a $500 fee costs more in APR terms than the same loan at 7.2% with no fee.
Compare like with like: APRs assume a standard term and repayment pattern, so they rank offers rather than predict your exact cost. Run your own amounts through the loan calculator to see the repayments that actually apply to you.
Common questions
Is the APR the same as the interest rate?
No. The interest rate prices the borrowed money alone; the APR also includes fees, so it is normally the higher of the two and the better comparison.
Does a lower APR always mean a cheaper loan?
For the same amount and term, yes. If the term or repayment type differs, compare the total repaid instead.