What does APR stand for in financial terms?

Annual Percentage Rate (APR) is a key financial concept that represents the annualized interest rate charged for borrowing or earned through an investment, expressed as a percentage. It provides a straightforward way to compare the cost of borrowing money between different lenders or the earnings on various investments. The APR takes into account not only the interest rate but also any fees or other costs associated with the loan or investment, offering a more comprehensive view of the total financial obligation or return.

In real-world applications, the APR is critical for consumers when evaluating loans, credit cards, or mortgages as it allows them to assess the true cost of their financing options over a yearly basis, leading to more informed financial decisions. Understanding APR can significantly impact budgeting and financial planning, making it an essential term in finance.