Annual percentage rate

The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. You may improve this article, discuss the issue on the talk page, or create a new article, as appropriate. (June 2022) (Learn how and when to remove this message)

The term annual percentage rate of charge (APR),^[1][2] corresponding sometimes to a nominal APR and sometimes to an effective APR (EAPR),^[3] is the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card,^[4] etc. It is a finance charge expressed as an annual rate.^[5][6] Those terms have formal, legal definitions in some countries or legal jurisdictions, but in the United States:^[3]

• The nominal APR is the simple-interest rate (for a year).
• The effective APR is the fee+compound interest rate (calculated across a year).^[3]

In some areas, the annual percentage rate (APR) is the simplified counterpart to the effective interest rate that the borrower will pay on a loan. In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way as a form of consumer protection. The (effective) APR has been intended to make it easier to compare lenders and loan options.