What does APR stand for in financial documentation?

Annual Percentage Rate (APR) is a crucial term used in financial documentation to describe the yearly interest generated by a sum that's charged to borrowers or paid to investors. It represents the total cost of borrowing or the return on investment expressed as a percentage, which is helpful for comparing loan products or investment opportunities.

APR provides a more complete picture than just stating interest rates alone because it includes any additional fees or costs associated with the loan or investment. This makes it an important metric for consumers when making financial decisions, as it reflects the true cost of borrowing over a year.

Having a clear understanding of APR can significantly influence how individuals assess loans or credit and helps ensure they can make well-informed decisions regarding their financial commitments.