The effective interest rate charged on an installment loan.

Abbreviated 'APR.' Expressed as a single percentage number, APR is representative of the actual cost of funds for each year of the term of the loan. As a standardized number, it provides a way for borrowers to compare the rates of multiple potential lenders. Any fees or additional costs associated with the transaction are included in this figure. In the case of mortgages, for example, this includes the mortgage insurance and origination fee.