Definition
The total cost of borrowing expressed as a yearly percentage, including interest and fees.
Not sure where this fits?
Answer a few questions and we’ll open the path that fits, at the right step.
Find my pathAbout this term
APR includes the interest rate plus origination fees, closing costs, and other lender fees. It's higher than the interest rate alone and provides a more accurate borrowing cost. APR allows better comparison between different loan offers.
Pro Tip
Always compare APRs when shopping mortgages, not just interest rates, for a true cost comparison. Ask lenders for a Loan Estimate showing APR clearly.
Example
A loan with a 6.5% interest rate and 1% in fees might have a 7% APR. Another lender might offer 6.75% interest with 0.5% fees, for a 7.25% APR.