# APR: Annual Percentage Rate Defined and Explained

APR—Annual Percentage Rate. You hear it all the time. Usually, you hear it in conjunction with other confusing financial terms. Then, you’re so busy trying to keep up with the conversation that the term APR might slip by you unnoticed. However, it’s a term to know, because it makes a difference in how much you pay when you borrow money. Here’s what you need to know about your APR, and why it’s important.

###### APR Explained

There are four key components to an APR—the amount you borrow, the duration of the loan, interest paid and fees. Your APR refers to the total cost of borrowing for one year, including interest and additional fees. It is expressed as a percentage. APR is a useful tool for comparison when shopping for loans and credit cards. In fact, APR is one of the most important items to consider when selecting which lender is right for you. It is a true reflection of the actual cost of a product, unlike only comparing various products’ interest rates or monthly payments. This is because APR includes all fees (not including late fees or NSF fees) associated with that loan or line of credit.

So, while one product could boast a low interest rate, you won’t get an accurate picture of that product by just looking at the interest rate. They could be including a whole host of fees that you won’t see by only evaluating interest rates.  Therefore, your monthly payment could be low with this product, but the yearly cost of that loan paints an entirely different picture.

###### Calculating APR yourself

You don’t have to rely on your lender to calculate the APR for you. When it comes to comparing loan products, take the time and do your homework. It’s possible to calculate the APR on your own by using spreadsheet formulas or online loan calculators. To calculate a product’s APR you’ll need to know the interest rate of the loan, the amount you plan to borrow, repayment terms and  any additional fees charged when the loan is funded.

###### What you can expect from us

We hate surprises. That’s why New Credit America loans are always straightforward. What you see is what you get. We want to help you restore your financial health, and we know that charging you lots of fees isn’t going to help. We encourage all our users to learn as much as possible before borrowing any money. An informed customer is the best customer. Learn more about our products, and click here for a free consultation.