Glossary

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Annual Percentage Rate

The annual percentage rate (APR) refers to the effective interest rates charged to the borrower, taking one-time expenses such as opening fees into account. It is used to determine the total cost of credit for the consumer as a percentage of the total loan amount. Like the average annual percentage rate (AAPR), it was developed as a standardization plan to make loan comparisons easier for the average consumer. In Australia, financial institutions are required to advertise the APR and AAPR to let consumers know the true interest rates they will be paying for the entire year.