Annual percentage rate (APR) – Financial Terms

A loan’s APR is what credit is costing you each year, expressed as a percentage of the loan amount. The APR includes most of a loan’s up-front fees as well as the annual interest rate, so it gives a more accurate picture of the cost of borrowing than the interest rate alone. For example, the APR on a car loan or a mortgage, which shows the actual interest you pay, is usually higher than the nominal, or named, rate you’re quoted for the loan.