What does 'APR' stand for?

The term 'APR' stands for Annual Percentage Rate. It represents the annualized interest rate charged for borrowing or earned through an investment, expressed as a percentage. This rate provides a standardized way of comparing interest rates from different lenders because it includes not only the interest cost but also any associated fees. As such, it gives borrowers a clearer picture of the total cost of a loan over a year, making it a crucial element in personal finance and borrowing decisions.

Understanding APR is essential for making informed financial choices, whether for loans, credit cards, or other financial products. It allows you to assess how much you will ultimately pay over the life of a loan, making it a key factor in budgeting and financial planning.