APR Explained

The Annual Percentage Rate (APR) is the total cost of a loan, including the interest rate and any additional fees, expressed as a yearly rate. The APR provides a more comprehensive and accurate representation of the true cost of a loan compared to the simple interest rate, as it includes all of the fees and charges associated with borrowing the money. For example, if a loan has a 5% interest rate and a $100 origination fee, the APR would be higher than 5% to reflect the additional cost of the fee. When comparing loans or credit products, it is important to consider the APR to determine the true cost of borrowing and to make an informed decision.

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