What does the acronym "APR" stand for in finance?

The term "APR" stands for Annual Percentage Rate, which is a crucial concept in finance, particularly when it comes to loans and credit. It represents the annualized cost of borrowing money expressed as a percentage of the loan amount. The APR includes not just the interest rate but also any fees or additional costs that may be associated with the loan, allowing borrowers to understand the true cost of borrowing over a year.

This comprehensive measure makes it easier for consumers to compare different loan offers. By looking at the APR, individuals can make better-informed decisions, as it reflects the total cost of credit rather than just the interest charged. Therefore, recognizing the significance of APR is essential for managing debt effectively and making sound financial choices.