Definition:
The annual cost of credit summed up as a percentage of the outstanding debt. This is usually higher than the nominal rate that a debtor is quoted as it includes much of the loan's up-front costs as well as annual interest. As it is an annual figure, careful measure should be taken if the loan is calculated across less-than-annual periods as the APR will be higher than it first appears (e.g. 5% interest each quarter is actually a 20% APR). Credit cards often have different APRs for different services, such as purchases, transfers, cash advances, etc. APRs are a good benchmark to use when comparing loans from different creditors.
