See the real cost of a loan once fees and points are included
APR stands for Annual Percentage Rate — the yearly cost of borrowing that includes the interest rate plus certain fees such as origination fees, points and closing costs. It's the number regulators require lenders to disclose so consumers can compare offers on an equal footing. The advertised "interest rate" only reflects interest on the principal, so it can understate the true cost of a loan.
The interest rate is the charge for borrowing the principal only. APR adds the amortized cost of fees, giving a more complete picture. Two loans with the same interest rate can have very different APRs if one carries higher fees. When comparing loans, always compare APRs — the lower APR is generally the better deal over the full term.
The interest rate is the cost of borrowing the principal only. APR includes the interest rate plus the amortized cost of upfront fees like origination charges and points. APR is always equal to or higher than the interest rate when fees are present.
Because APR spreads the cost of loan fees over the life of the loan on top of the interest rate. The more fees you pay upfront, the higher the APR becomes relative to the advertised rate.
Run both loan offers through this calculator with the same term. The loan with the lower APR costs less over the full term — that's the one to choose, assuming all other terms are equal.