Annual Percentage Rate (APR) Calculator
What is the Annual Percentage Rate (APR)?
The Annual Percentage Rate (APR) is a broader measure of the cost of borrowing money. It includes not only the interest rate of a loan but also any additional fees or charges associated with obtaining that loan. Lenders are required by law in many countries to disclose the APR to borrowers, as it provides a more accurate representation of the true cost of borrowing than the interest rate alone.
Understanding APR is crucial because it allows you to compare different loan offers more effectively. A loan with a lower stated interest rate might actually be more expensive if it comes with higher fees. By looking at the APR, you can get a clearer picture of which loan will cost you the least over its entire term.
The APR is typically expressed as a percentage. It helps consumers make informed decisions by standardizing the way the cost of credit is presented across various financial products, such as mortgages, auto loans, personal loans, and credit cards.