# What Is An Annual Percentage Rate (APR)?

Medium

Medium

Annual Percentage Rate (APR) is the true cost of borrowing money. It includes the interest rate and any additional fees. APR is a good way to compare different loans and make sure you are getting the best deal.

Annual Percentage Rate (APR) is the true cost of borrowing money. It includes the interest rate and any additional fees. APR is a good way to compare different loans and make sure you are getting the best deal.

## What is APR?

The annual Percentage Rate (APR) is a measure of the cost of borrowing money. It is calculated by adding the interest rate to any additional fees associated with the loan. APR can be used to compare different loans and to make sure you are getting the best deal possible.

## Example

For example, let's say you are considering two different credit cards. One card has an interest rate of 15%, and the other card has an APR of 20%. The 20% APR includes a \$20 annual fee. If you only carry a balance on your credit card for one month, you will pay \$30 in interest on the 15% interest rate card and \$32 in interest on the 20% APR card. However, if you carry a balance for a year, you will pay \$450 in interest on the 15% interest rate card and \$520 in interest on the 20% APR card.

## How is APR calculated?

APR is calculated by adding the interest rate to any additional fees associated with the loan. The interest rate is the amount of interest that is charged on the outstanding balance of the loan each year. The additional fees can include origination fees, application fees, annual fees, and late payment fees.

## How to use APR to compare loans

When you are comparing different loans, it is important to look at the APR. The APR will give you a better idea of the true cost of the loan. For example, two loans with the same interest rate may have different APRs if one loan has additional fees.

## How to lower your APR

There are a few things you can do to lower your APR. One way is to improve your credit score. A higher credit score will qualify you for lower interest rates. You can also try to negotiate with your lender for a lower APR. Finally, you can shop around for a loan with a lower APR.

## Conclusion

APR is an important factor to consider when you are borrowing money. By understanding APR, you can make sure you are getting the best deal possible.

• APR is not the same as APY (annual percentage yield). APY takes into account the effects of compounding interest, while APR does not.

• APR is required to be disclosed by lenders for all loans, including credit cards, mortgages, and auto loans.

• You can find the APR for a loan by reading the loan agreement or by contacting the lender.

• If you are not sure how to calculate APR, many online calculators can help you.

# Learn how to make passive income with just on trade a month.

ZEROTOHUNDRED offers online courses to teach you about finance and crypto. In just 30 minutes a month, you will get from 0 to 100 and feel confident to invest.