annual percentage rate vs annual interest rate

Both 'annual percentage rate' and 'annual interest rate' are correct wordings, but they have slightly different meanings. 'Annual percentage rate' (APR) includes not only the interest rate but also any additional fees or costs associated with the loan. On the other hand, 'annual interest rate' refers specifically to the interest charged on a loan without considering other charges. The choice between the two depends on whether you want to refer to the total cost of borrowing (APR) or just the interest rate itself.

Last updated: March 29, 2024 • 505 views

annual percentage rate

This phrase is correct and commonly used in financial contexts to refer to the total cost of borrowing, including interest and other fees.

Use 'annual percentage rate' when referring to the total cost of borrowing, including interest and other charges associated with a loan.

Examples:

The credit card has an annual percentage rate of 18%.
Always compare the annual percentage rates of different loan offers before making a decision.

Alternatives:

APR
effective annual rate
cost of borrowing
total cost of credit
annualized cost

annual interest rate

This phrase is correct and commonly used to refer specifically to the interest charged on a loan without considering additional fees or costs.

Use 'annual interest rate' when focusing on the interest charged on a loan without considering other charges or fees.

Examples:

The bank offers an annual interest rate of 5% on savings accounts.
Make sure you understand the difference between the annual interest rate and the APR before taking out a loan.

Alternatives:

interest rate
nominal interest rate
simple interest rate
yearly interest rate
fixed interest rate

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annual percentage rate vs annual interest rate