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Glossary Finance

APR

APR (annual percentage rate) is the yearly cost of borrowing, expressed as a percentage, that includes the interest rate plus certain fees.

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In more detail

Because fees are included, the APR is usually higher than the quoted interest rate and is the fairer way to compare loan offers. For savings, the equivalent measure is the APY, which includes compounding. Rules for what counts in an APR vary by country, so compare like with like.

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See also

  • Glossary APY
    APY (annual percentage yield) is the real yearly return on savings once compounding is included.
  • Glossary Amortization
    Amortization is paying off a debt through regular instalments that each cover interest plus part of the principal.
  • Glossary Compound interest
    Compound interest is interest calculated on the original amount plus all the interest already added, so growth builds on itself.
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