What is APR vs interest rate?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
The interest rate is the cost of borrowing the principal; the APR (annual percentage rate) folds in the rate plus most lender fees and points, giving a fuller picture of the loan's yearly cost.
APR helps you compare offers with different fee structures, though it assumes you keep the loan to term. We'll show both numbers so you can compare lenders accurately.
Two different numbers
Your interest rate is the cost of borrowing the money, expressed as a percentage. Your APR, or annual percentage rate, includes the interest rate plus most loan fees, so it reflects the true yearly cost.
That is why the APR is usually a little higher than the interest rate on the same loan.
Using both to compare
The interest rate sets your monthly payment. The APR helps you compare the overall cost of loans that have different fees, giving you a fuller picture.
We break down both figures so you know what you are really paying. Reach out and we will explain your rate and APR side by side.