What is APR and how is it figured?
Annual Percentage Rate (APR) is a calculated interest rate that reflects the overall cost of a loan on an annual basis. APR includes interest payments, origination fees, discount points, and other costs of getting a loan and is, therefore, usually higher than the interest rate. APR can be useful for comparing different types of loans. However, while all lenders are required to calculate APR based on the guidelines provided by the Truth in Lending Act, not all lenders include the same costs in the calculation. This can make it difficult to compare the APR for loan programs from different lenders.
