What does APR mean? You should know

APR stands for Annual Percentage Rate. It represents the total cost to borrow money for a year. It’s different from a simple interest rate in that it includes fees, closing costs, and other miscellaneous expenses required to borrow the money.

Two loans might have the same interest rate but charge very different fees. The loan with higher fees will have a higher APR even though the published interest rate is the same. APR allows you to more directly compare different loan options.

APR is different from APY (Annual Percentage Yield) because APR does not account for compounding effects. APY cannot be directly compared with APR because of this, so be careful when comparing offers!