APR
Origin of APR
Words nearby APR
Other definitions for APR (2 of 2)
FINANCIAL
What does APR mean in banking?
APR is an abbreviation of annual percentage rate, which is the annual rate of interest a bank or other creditor charges for lending money to a borrower. The APR is expressed as a percentage of the loan amount and includes not only the annual interest on the loan but all other costs involved in getting the loan.
An APR can also refer to the annual rate of return on an investment (also called the annual percentage yield or APY), such as a savings CD (certificate of deposit), expressed as a percentage of the investment amount.
Examples of APR in a sentence
“An APR can make it easier to compare loan rates since it tends to include all the fees associated with it.”
—”Understanding Annual Percentage Rates” Rocket Loans. Retrieved March 15, 2020.
“Sometimes getting a good APR will require you to pay certain fees or a down payment, such as with an auto loan.”
—”Understanding Annual Percentage Rates” Rocket Loans. Retrieved March 15, 2020.
“Sure, the best APR is 0%, but those are typically introductory offers that don’t last long.”
—”Understanding Annual Percentage Rates” Rocket Loans. Retrieved March 15, 2020.
APR vs. interest rate
APR and interest rate are easily confused, as they are both an annual percentage rate related to how much a loan will cost on top of the principal amount being borrowed.
APR is a more comprehensive measure of the costs as it includes the interest rate as well as other charges or fees such as private mortgage insurance (PMI), loan origination or processing fees, closing costs, and prepaid interest. For this reason, the APR quoted for a loan is usually higher than the stated interest rate.