Annual Percentage Rate (APR)

Annual Percentage Rate (APR) expresses the cost of borrowing or return on investment as a yearly percentage.

It standardizes rates that might otherwise by quoted per month, per quarter, or per payment period, allowing easy comparison across financial products.

In essence, APR converts periodic interest into its annual equivalent rate, the percentage earned or paid over one full year.

Unlike Annual Percentage Yield (APY), APR does not include compounding effects, so it often understates the actual annual return or cost.