annual percentage rate (APR)

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An annual percentage rate (APR) is the yearly rate charged for a loan or earned by an investment. In other words, it is a measure of the cost of credit, expressed as a yearly rate. APR includes interest as well as other fees associated with the transaction. It is calculated by multiplying the interest rate per payment period by the number of such payment periods in a year.

This case from Montana, explains that Annual Percentage Rate, or ‘APR,’ is “the cost of credit on a yearly basis expressed as a percentage, an amount which represents the true, objective, and accurate cost of borrowing money.”

[Last updated in December of 2021 by the Wex Definitions Team]