Annual percentage rate
Annual percentage rate (APR) is a measure of how much it costs for you to borrow money. Think of it like buying candy with your allowance. Let's say you want to buy a candy that costs $1, but you don't have enough allowance, so you borrow 50 cents from your friend. Your friend will want to charge you something extra for letting you borrow the money, maybe another 10 cents.
That extra 10 cents is kind of like APR. It's the amount of extra money you'll have to pay back for borrowing. But if you're not just borrowing a small amount for a short time, APR can get more complicated.
If you borrowed $100 from the bank to buy a new bike, the bank would expect you to pay them back that $100 plus some extra money called interest. Interest is the fee you pay for borrowing money from the bank. The APR would tell you how much interest you’ll have to pay based on how much you borrowed and for how long.
The APR includes the interest rate and any additional fees or costs associated with borrowing money. When you compare loan options, you'll want to look at the APR to figure out which loan will be the most affordable for you. The lower the APR, the less you'll have to pay back.
That extra 10 cents is kind of like APR. It's the amount of extra money you'll have to pay back for borrowing. But if you're not just borrowing a small amount for a short time, APR can get more complicated.
If you borrowed $100 from the bank to buy a new bike, the bank would expect you to pay them back that $100 plus some extra money called interest. Interest is the fee you pay for borrowing money from the bank. The APR would tell you how much interest you’ll have to pay based on how much you borrowed and for how long.
The APR includes the interest rate and any additional fees or costs associated with borrowing money. When you compare loan options, you'll want to look at the APR to figure out which loan will be the most affordable for you. The lower the APR, the less you'll have to pay back.
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