The interest rate is what it costs to borrow money, shown as a percentage. The APR (Annual Percentage Rate) includes the interest rate plus extra fees and costs, giving a fuller picture of the total loan expense.
Quick Glance at APR and Interest Rate
Your interest rate and Annual Percentage Rate (APR) are not the same. The interest rate is what you pay on top of the loan amount, shown as a percentage. The APR includes the interest rate plus some other loan costs.
APR helps you compare loan offers accurately. It shows the true yearly cost of the loan, including some fees and insurance premiums, allowing for a fair comparison.
Laws require both interest rate and APR disclosure. This prevents lenders from hiding fees behind low rates. However, what’s included can vary by lender and loan.
If you have questions or want to discuss a specific Loan Estimate, contact us for a no-obligation consultation.
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