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What is the difference between the interest rate and the APR?

April 26, 2017Apr Interest rate

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What is the difference between the interest rate and the APR?

7 Answers

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The interest rate (or stated rate) is the cost of lending money to you by the lender, as expressed as a percentage. The APR, or annual percentage rate, is the cost of the loan expressed as a yearly rate and may include some additional costs such as points and other fees paid to acquire the loan.

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The interest rate is the cost to borrow the lender’s money. The APR represents the total cost of the mortgage over the life of the loan, including closing costs and lender points.

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The interest rate is the cost to borrow the lender’s money. The APR represents the total cost of the mortgage over the life of the loan, including closing costs and lender points.

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The Annual Percentage Rate (APR) is the yearly cost of a mortgage expressed as a percentage, and takes into account the total cost of a loan, including the interest rate and other finance changes (e.g., closing fees and points). The interest rate consists solely of the cost for borrowing a lender’s money. Using an APR allows a borrower to more accurately compare the true costs of various loans offered by different lenders, or different loan programs offered by the same lender.

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The interest rate is the cost for borrowing a lender’s money while the APR takes into account the total cost of a mortgage, including closing fees and points over the life of the loan, not just the interest due.