Interest Rate is the cost of borrowing money, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus lender fees and closing costs.
Key Differences
- Interest Rate: Only the cost of the loan.
- APR: Gives a fuller picture of total borrowing cost.
Why APR Matters
- Two loans can have the same interest rate but different APRs.
- A lower APR can save thousands over the life of a mortgage.
Tip
Always compare APRs—not just interest rates—when shopping for loans.