Annual Percentage Rate (APR) Financial Glossary
What is it? The annual cost to a borrower of consumer credit that has been calculated according to certain consumer laws (see Interest Rate). The relationship of the total finance charges associated with a loan. (Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report). This must be disclosed to borrowers by lenders under the Truth-in-Lending Act (regulation Z). It is a function of the loan amount, the interest rate, the total added cost, and the terms. The APR would equal the interest rate if there is no additional cost to a given loan.Finance Term Definition Added By: Samuel
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