APR

The actual cost of any loan is often expressed in terms of an APR.

The APR of a loan is the annual percentage rate and may often be higher than the basic interest rate of your loan.

This is because the loan may include certain payments such as administration and early closure charges which are not included in your loan interest rate but are included in your APR.

When you are looking for a loan it is important to compare the APR values to get a clear and full picture of what the loan actually ends up costing you.

Basically, the APR is calculated on the amount of the loan and what your proposed payments are until the loan and additional interest and other costs are paid in full.

Here is an example from a mortgage company: A $50,000 dollar loan with $2,000 prepaid charges for a 30 year term at a fixed rate of 12% would mean monthly payments of $514.31.

However, the APR is based on the amount financed ($48,000), while the payment is
based on the actual loan amount given ($50,000), so the APR (12.5553%) is higher than the loan interest rate of 12%.