---
title: "APR (annual percentage rate): definition | Desert Rock Capital"
url: "https://www.desertrockcapital.com/glossary/apr"
description: "APR, or annual percentage rate, is the yearly cost of a loan expressed as a percentage, including interest plus certain required fees."
---

Loan costs

# APR (annual percentage rate)
All lending terms
Definition

APR, or annual percentage rate, is the yearly cost of a loan expressed as a percentage, including interest plus certain required fees. It is designed to let you compare the cost of different loans on a like-for-like basis.

The annual percentage rate (APR) states the cost of credit as a yearly percentage and folds in not only the interest rate but also certain required charges, such as some origination fees, so it often gives a fuller picture of cost than the interest rate alone. In the United States, the Truth in Lending Act requires lenders to disclose the APR before you commit, which allows offers to be compared on a consistent basis. APR can be fixed or variable. It is a standardized cost measure rather than the dollar amount of interest; the actual interest paid also depends on the principal, the term, and how the balance is paid down. Reviewing the APR alongside the payment amount, the schedule, and the full written terms shows what a loan costs.

Source: [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-loans-interest-rate-and-its-apr-en-733/). This definition is general educational information, not legal or financial advice.
Related

- [Loan FAQs](/faqs)
- [Compare: vs. a payday loan](/compare/payday-loan)
- [Compare: vs. a bank loan](/compare/bank-loan)
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