What does APR stand for in relation to loans?

APR stands for Annual Percentage Rate, which is a crucial concept in the lending industry. It represents the yearly cost of borrowing expressed as a percentage of the loan amount. The APR includes not only the interest rate but also any additional fees or costs associated with securing the loan, which provides borrowers with a more comprehensive understanding of the total cost of financing.

This metric is essential for borrowers because it allows for a straightforward comparison of different loan products. By looking at the APR, borrowers can assess how much they will actually pay over the life of a loan, including all related costs, making it a vital tool for informed financial decision-making. In contrast, the other choices, while they might seem relevant, do not accurately describe the concept of APR in the context of loans.