# Annual Percentage Rate

Definition

• A yearly interest rate that includes fees and costs paid to obtain the loan. Lenders are required by law to disclose this interest rate. The rate is calculated in a standard way, taking the average compound interest rate over the loan term, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

Notes
A number used to compare costs associated with mortgage loans and other forms of financing.

Synonyms
yearly percentage rate, interest rate comparison, cost of loan

Acronyms
APR

## Related Terms and Acronyms

• Annual Percentage Yield (APY) Acronym,
• The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.
• Compound Interest Definition,
• Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.
• Compounding Method Definition,
• Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
• Interest (int, IN) Acronym & Abbreviation,
• Money paid for the use of borrowed funds, usually expressed as an annual percentage.
Bank account transaction code.
• The date one month prior to the beginning of amortization when accrued interest computed on the monies advanced becomes due.
• Interest Factor Definition,
• The decimal equivalent for an interest rate on a unit amount for a period of time. Computed by interest rate divided by number of days in a basic year times the number of days accrued.
• Interest Rate (IR) Acronym, Very Important,
• The rate a lender charges an individual to borrow money.
• Interest-Crediting Methods Definition,
• A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
• Monthly Periodic Rate Definition,
• The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12.
• Mortgage Rate Definition, Very Important,
• The interest rate on a mortgage loan.
You can compare mortgage rates using this website by clicking 'Rates' above.
• Note Rate Definition,
• The percentage paid by a borrower for the use of money, usually expressed as an annual percentage on a promissory note.
• Principal and Interest (PI, P&I) Acronym,
• Acronym for the elements of a mortgage payment: principal and interest.
• Simple Interest (SI) Acronym, Important,
• Interest computed only on the principal balance, without compounding.
• Simple Interest Loan Definition,
• A method of allocating the monthly payment between interest and principal. The interest charged is determined by the unpaid principal balance on the loan, the interest rate, and the number of days since the last payment. The rest of the payment goes to the principal. Making early payments or additional payments reduces the loan's principal and cuts the total interest paid over the life of the loan.