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Definition
APR (annual percentage rate) is the total cost of a loan over a year expressed as a percentage, incorporating the interest rate and certain compulsory fees. It's designed to let borrowers compare facilities on a consistent basis.
In plain terms
It rolls the rate and key charges into one yearly figure, so a loan with a low rate but big fees can't hide its true cost behind the headline.
Why it matters for your company
Beware costs quoted as a factor rate or flat rate, which look cheaper than the equivalent APR. Always compare true annual cost. See true cost calculator.
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