What Is APR on a Loan?
Published 2026-03-26 · Updated 2026-03-26 · Loanmit Editorial Team
APR reflects the annual cost of borrowing including certain fees—not just the interest rate.
APR Meaning
APR (annual percentage rate) expresses the cost of credit as a yearly percentage. It includes the interest rate plus certain finance charges required to be included under disclosure rules.
Using APR to Compare
When comparing similar loan products, APR helps you weigh cost beyond the headline rate. Always read the full loan agreement for fees and prepayment terms.
Frequently Asked Questions
- Can APR be lower than the interest rate?
- Usually APR is equal to or higher than the note rate when fees are included. Unusual structures should be explained in disclosures.