What is APR?
Annual Percentage Rate is an estimate of what the true cost of a loan will be in a full term, this is normally a figure used to compare the loan programs of different lenders. Lenders may calculate APR differently from other lenders leading to very different results. These calculations are complex in their own right. The Federal Truth in Lending law requires companies to provide the APR when they advertise the rate to prohibit lenders from charging hidden fees when advertising a low APR. In addition, increases in APR are due in the event of selling your home or refinancing a loan.
APR is the annual percentage rate on a credit card. In other words, it is the amount you will pay in interest charges per year. In its most simplistic form, you can figure out how much you pay per day, take the APR divided by 365. Unfortunately, the true amount you will pay a credit card company is more apt to compound the cost of interest, meaning the cost of having credit will be greater than just a simple interest charge on your purchases, particularly if you do not pay off your balance in full each month because you will be charged interest on any interest charges that are not paid in the preceding month, and any penalties and fees will be in addition to the annual interest calculation. The APR on a credit card can vary due to several things. If you have a good credit rating, you will probably be offered a card with a low APR. However, if you are applying for your first card or have a poor credit history, your APR will be much higher. The rates can vary anywhere from a 3 percent ra
The Annual Percentage Rate (APR) is the relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the federal Truth-in-Lending Act, according to Charles O. Stapleton III, Thomas Moran and Martha R. Williams, authors of Real Estate Principles, 5th Ed., Dearborn Financial Publishing, Chicago; 2001. The APR is the actual yearly interest rate paid by the borrower, figuring in the points charged to initiate the loan and other costs. The APR discloses the real cost of borrowing by adding on the points and by factoring in the assumption that the points will be paid off incrementally over the term of the loan. The APR is usually about 0.5 percent higher than the note rate.
APR stands for annual percentage rate. Simply put, APR is the effective rate you will pay on your mortgage loan based on the interest rate and related closing costs. It will almost always be higher than the interest rate on your loan, because it factors in your “cost to obtain the credit” . . . i.e. your closing costs. Please note, however, that your payment is based on your simple interest rate, not APR.
APR is the acronym for annual percentage rate. The APR is a reference to a federally required calculation of the yearly cost of a loan that includes interest rates and other fees. The requirement for APR disclosure was intended to help consumers compare loans. Unfortunately, the requirements for what is included in the calculation of APR are not sufficiently standardized to create a reliable comparison guide. Some fees are included, such as processing and underwriting fees, but other fees may or may not be in the APR calculation. For example, fees for title or abstract, notaries, inspections, and so on, may or may not be included. So be sure you ask what is included in an APR before you use it to compare loans or credit. An APR on a credit card will not include late fees, over-the-limit fees, or finance charges you may incur by not paying off your balance each month. So the APR may not reflect the entire cost of the credit. (Reviewed 10.31.
