APR vs interest rate

Last updated: 2026-08-14

The interest rate describes the cost of borrowing before certain fees. APR is meant to express a broader annualized borrowing cost, so it can be higher when finance charges are included.

Why APR can be higher

Origination fees, finance charges, points, and other included costs can raise the effective cost of borrowing even when the note rate looks low.

Why payment still matters

APR helps compare cost, but the monthly payment and term still determine cash flow and how long the debt remains active.

Use the calculator

Use the APR calculator to model an annualized cost with fees. Use the loan comparison calculator to compare two offers.