# why is the apr different from the interest rate

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Effective interest rate – Calculation (link). For example, 10% nominal apr compounded monthly is 10.4713% Effective APR (1 + 0.10/12)^12 – 1.

The two rates on your car loan paperwork are there to make it easier to understand your loan. One of your rates (the lower of your two) is simply your interest rate and the other is your APR, or annual percentage rate. Each rate tells you a different part of the same story. Let’s look at what each rate stands for and how you can compare them.

Annual Percentage Rate, or APR, refers to the total cost of borrowing, as the calculation for APR includes not only the interest rate, but also many other fees the borrower might be charged. So APR is seen as the "effective interest rate," a way for borrowers to compare one loan to another (even if it has some pitfalls ).

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1) How do interest rates of banks look since the beginning of 2019? Two different interest rates need to be considered. the interest rates of both borrowing and lending have barely moved. 2) Why is.

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The basic difference between interest rate and APR is that, while interest rate shows current borrowing cost, APR is used to present the true picture of total cost of financing, where the interest rate and the lender fees needed to finance the loan are taken into consideration.

Find out about how APR is calculated and how it differs from a standard interest rate.

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Whether that inaugurates a series of quarter-percentage-point interest rate cuts that could stretch. One reason: No clear consensus from Fed officials about why they need to cut rates in the first.

APR (or annual percentage rate) is the higher of the two rates and reflects your total cost of financing your vehicle per year including fees and interest accrued to the day of your first payment (APRs are useful for comparing loan offers from different lenders because they reflect the total cost of financing)