Annual Percentage Rate (APR)

Annual Percentage Rate (APR) is the yearly cost of borrowing money expressed as a percentage, including both the interest rate and any fees charged by the lender (such as origination fees, discount points, and mortgage broker fees). APR is designed to give borrowers a single number that reflects the true cost of a loan, making it easier to compare offers from different lenders. Under the Truth in Lending Act (TILA), US lenders are required to disclose APR. Note that APR does not account for compounding within the year (that measure is called APY); it is a simple annualized rate.