What is an annual percentage rate (APR)?
An annual percentage rate is a yearly rate charged for financing or earned through investment without including the compound interest within that period. It is a measure that attempts to determine what percentage of the principal you will pay per period, annually or monthly, taking every charge from monthly payments throughout the loan, upfront fees, and soon into the record.
APR is represented as a rate that describes the actual yearly cost of funds over the period of a loan. This includes any expenses or extra costs associated with the transaction but were not calculated when compounding into the report. As loans or credit agreements can differ in terms of interest-rate condition, transaction fees, late fines, and other circumstances, a standardized computation such as the APR provides borrowers with a bottom-line figure they can quickly compare to rates charged by other lenders.