Definition: The annual percentage rate, or APR, is the interest rate charged on the amount borrowed. It reflects the annual cost of borrowing money. APR makes it easier to compare different loans and credit cards, because you can easily see which loan/credit card would be cheaper. For example, a loan with a 10% interest rate is less expensive than a loan with a 15% interest rate (assuming other things are equal).
There are two different types of APRs. The nominal APR is the interest rate that's stated on a loan. The effective APR includes fees that have been added to your balance.
Also Known As: annual percentage rate, interest rate
