Annual Percentage Rate (APR)
Annual percentage rate (APR) is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay.
Source: Federal Trade Commission
Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.
Source: U.S. Department of Housing and Urban Development
A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.
Source: U.S. Department of Housing and Urban Development
The actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of APR is required by the Truth-in-Lending Law and allows borrowers to compare the actual costs of different mortgage loans.
Source: Ginnie Mae
The annualized cost of credit expressed as a percentage; used in finance agreements. An annual percentage rate, or an equivalent rate, is not used in leasing agreements.
Source: Federal Reserve Board
