Annual Percentage Rate

An Annual Percentage Rate is the total interest rate for a time period of an year.

• AKA: APR, Annual Percentage Rate of Charge.
• See: Effective Interest Rate, Interest Rate, Annuity.

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References

2016

• (Wikipedia, 2016) ⇒ http://en.wikipedia.org/wiki/Annual_percentage_rate
  • The term annual percentage rate of charge (APR), corresponding sometimes to a nominal APR and sometimes to an effective APR (or EAPR), describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. It is a finance charge expressed as an annual rate.

In some areas, the annual percentage rate (APR) is the simplified counterpart to the effective interest rate that the borrower will pay on a loan. In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way as a form of consumer protection. APR is intended to make it easier to compare lenders and loan options.

• (Investopedia, 2016) ⇒ http://www.investopedia.com/terms/a/apr.asp
  • QUOTE: An annual percentage rate (APR) is the annual rate charged for borrowing or earned through an investment, and is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction but does not take compounding into account. As loans or credit agreements can vary in terms of interest-rate structure, transaction fees, late penalties and other factors, a standardized computation such as the APR provides borrowers with a bottom-line number they can easily compare to rates charged by other lenders.