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What are the differences between the APR and the stated interest rate?

April 26, 2017Apr differences Interest rate

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What are the differences between the APR and the stated interest rate?

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A. APR stands for Annual Percentage Rate and is a much better indicator than just the interest rate of the actual cost of a mortgage loan, as it estimates what you’ll pay over the course of an entire year. The federal law requires every lender to disclose their APR while advertising for their interest rate. This protects borrowers from being wrongly attracted by a lender’s low rate advertisement. APR includes other fees and cost that actually drive up the cost of purchasing a loan.