What does APR stand for in finance?

APR stands for Annual Percentage Rate. It represents the yearly interest rate charged for borrowing or earned through an investment, expressed as a percentage. It provides a comprehensive view of the cost of borrowing, including any additional fees or costs associated with the loan, which allows consumers to make informed comparisons between different financial products. The APR is crucial for understanding the true cost of credit, as it includes not just the interest but also any other charges that may be part of the loan agreement, thereby giving borrowers a clearer picture of their potential financial commitments over the duration of the loan. Understanding APR helps individuals assess the overall expense related to loans or credit cards, ensuring that they can evaluate which options best suit their financial situation.