Also called: Annual percentage rate, Interest rate
APR
APR, or annual percentage rate, is the yearly interest rate charged on a loan expressed as a percentage of the outstanding balance. It reflects interest only unless stated otherwise, so it excludes fees that a comparison rate would capture.
What is an apr?
APR, or annual percentage rate, is the yearly interest rate charged on a loan expressed as a percentage of the outstanding balance. It reflects interest only unless stated otherwise, so it excludes fees that a comparison rate would capture.
Example
A $100,000 facility at 9% APR accrues about $9,000 of interest in the first year before principal repayments reduce the balance.
Why it matters
Converting a factor rate to an approximate APR is often the only way to see how expensive short-term funding really is.