Comparison Guide
APR vs. Interest Rate: Understanding True Loan Costs
Learn why Annual Percentage Rate (APR) reflects the true cost of borrowing compared to the nominal interest rate.
Interest Rate
The basic annual percentage cost charged by the lender on the principal loan amount.
Open Interest RateAPR (Annual Percentage Rate)
Includes interest rate PLUS origination fees, closing costs, broker fees, and points.
Open APR (Annual Percentage Rate)The Verdict
Always compare loans using APR rather than interest rate alone, because APR represents the true total cost of borrowing per year.