Loans & Credit

What Is APR?

APR (annual percentage rate) is the yearly cost of borrowing money, expressed as a percentage. Unlike the plain interest rate, APR also includes most lender fees, such as origination fees, so it gives a more complete picture of what a loan or credit card costs over a year.

How APR Works

Lenders in many countries are required to disclose APR so that borrowers can compare offers on the same basis. Two loans with the same interest rate can have different APRs if one charges higher upfront fees, because APR spreads those fees across the loan term.

APR vs. Interest Rate

The interest rate is only the cost of borrowing the principal. APR adds required fees on top of that rate. For this reason APR is usually equal to or higher than the interest rate. On credit cards with no annual fee, APR and the interest rate are often the same number.

APR vs. APY

APR does not include compounding, while APY (annual percentage yield) does. APR is typically used for borrowing and APY for savings.

Example

A 10,000 loan at a 7% interest rate with a 300 origination fee has an APR higher than 7%, because the borrower pays the fee in addition to interest.

🧮 Calculate It Yourself

Put APR (Annual Percentage Rate) into practice with these free calculators — no sign-up, nothing stored.

💳 Loan Calculator (EMI) Works for any loan type — find your monthly payment and total interest. Calculate → 💳 Credit Card Payoff Calculator See how long minimum payments really take — and what a fixed payment saves. Calculate → 🚗 Auto Loan Calculator Estimate your monthly car payment and total interest for new or used vehicles. Calculate →

🔗 Related Terms

Interest Rate APY (Annual Percentage Yield) Principal Credit Utilization Ratio Refinancing

More Loans & Credit Terms

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.