What is "Annual Percentage Rate (APR)" meaning?

Annual percentage rate (APR) is a standardized measure used to show the total cost of borrowing over a year. It includes the interest rate and any associated fees or charges, providing a clearer view of the true cost of a loan or credit product. APR helps borrowers compare different financial offers on equal terms.

Example

“Before choosing a credit card, she compared the APRs to find the most affordable option.”

How is "Annual Percentage Rate (APR)" used in business?

In business, APR is often referenced in financing decisions, such as loans, credit lines, or credit cards. It helps entrepreneurs and financial managers evaluate which credit products offer the best value and lowest long-term cost.

Pro Tip

Always look beyond just the interest rate—APR reveals the full cost of borrowing, especially when fees are involved.