What Does APR Stand For and Mean?


APR stands for annual percentage rate.  It is effective cost of credit in consumer loans and real estate loans expressed as a percentage rate. The annual percentage rate is the finance charge the borrower actually pays, including loan interest, points, and origination fees..  



The Federal truth in lending act of 1968 requires lenders to calculate the cost of credit as an annual percentage and disclose the APR in large bold type in loan application documents. APR rates and the dollar amount (principal and interest) for various fixed-rate amortizing loans can be found in APR tables available from the Federal Reserve Board. 

In layman's terms your APR will always be different from your interest rate unless there are $0 closing costs on your loan.  The APR allows you to take into consideration the closing costs.


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