APR (Annual Percentage Rate)
Understand the annual percentage rate for loans.
Definition
APR represents the yearly interest generated by a sum that's charged to borrowers or paid to investors.
Example
For a $10,000 loan at 5% APR over 3 years, your monthly payment includes both principal and interest.
Calculation
Monthly Payment=Loan Amount×[r(1+r)n]÷[((1 +r)n - 1)]
Example: For a $10,000 loan at 5% APR over 3 years, your monthly payment ≈ $299.71.