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Annual percentage rate (APR)

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Annual Percentage Rate (APR)

The Annual Percentage Rate (APR) is a measure of the cost of borrowing money, expressed as a yearly rate. It includes the interest rate, any fees or other charges associated with the loan, and is expressed as a percentage. The APR is used to compare different loan products and to determine the cost of borrowing money. It is important to understand the APR when shopping for a loan, as it can help you determine which loan product is the most cost-effective.

History of APR

The concept of APR was first introduced in the United States in the Truth in Lending Act of 1968. The Act was designed to protect consumers from deceptive lending practices by requiring lenders to disclose the cost of borrowing money. The APR was designed to provide a standard measure of the cost of borrowing money, so that consumers could compare different loan products and make an informed decision.

Comparison Table

Loan Product Interest Rate APR
Fixed Rate Mortgage 3.5% 3.6%
Adjustable Rate Mortgage 2.5% 3.2%
Personal Loan 7.5% 8.2%

Summary

The Annual Percentage Rate (APR) is a measure of the cost of borrowing money, expressed as a yearly rate. It includes the interest rate, any fees or other charges associated with the loan, and is expressed as a percentage. The APR is used to compare different loan products and to determine the cost of borrowing money. It is important to understand the APR when shopping for a loan, as it can help you determine which loan product is the most cost-effective. For more information about APR, you can visit websites such as the Consumer Financial Protection Bureau, the Federal Reserve, and the National Credit Union Administration.

See Also

  • Interest Rate
  • Loan Term
  • Loan Origination Fee
  • Closing Costs
  • Credit Score
  • Debt-to-Income Ratio
  • Mortgage Insurance
  • Prepayment Penalty
  • Loan-to-Value Ratio
  • Amortization Schedule

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