APR vs interest rate: compare the real cost of a loan
Understand what the stated rate covers, how fees affect APR, and which loan details to compare before borrowing.
Rate and APR answer different questions
The interest rate is the charge on the loan balance under the contract. Annual percentage rate (APR) is a standardized annualized measure that can reflect certain lender fees as well as interest; exact inclusions vary by jurisdiction and loan type. Neither number alone shows your cash payment schedule or every possible late charge.
Compare offers on the same basis
A 10,000 loan at 6% with a 300 upfront fee can cost more than a 10,000 loan at 6% without that fee, even though the stated rate matches. The exact APR depends on the timing of payments, fee treatment and local disclosure rules. Ask for the payment schedule and total paid for the same principal and term.
Model the payment, then read the contract
Use the loan calculator for an estimated amortizing payment, add disclosed fees separately, and check prepayment penalties, variable-rate reset terms and optional products. A lower monthly payment from a longer term may increase total interest. Compare the same repayment period rather than ranking offers by one advertised figure.
Try it and keep reading
Try your numbers in loan, loan apr. Then read the related guide for context and assumptions.