Loan basics

What is APR and how is it different from interest rate?

Interest Rate is the cost of borrowing the principal loan amount. APR (Annual Percentage Rate) includes the interest rate PLUS additional fees (origination fees, mortgage points, mortgage insurance), giving you the true cost of the loan.

APR is always equal to or higher than the interest rate. Use APR to compare loans from different lenders ??? it is a more accurate cost comparison tool.

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