What is "annual percentage rate"

The term annual percentage rate of charge (APR), corresponding sometimes to a nominal APR and sometimes to an effective APR (or EAPR), describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. It is a finance charge expressed as an annual rate. Those terms have formal, legal definitions in some countries or legal jurisdictions, but in general:

:* The nominal APR is the simple-interest rate (for a year).

:* The effective APR is the fee+ compound interest rate (calculated across a year).

"Subject: Regulation AA", Alfred F. "Bob" Blair, Jr.,
US Federal Reserve, 2008-06-28, webpage:
US-Federal-Reserve-R1314.

In some areas, the annual percentage rate (APR) is the simplified counterpart to the effective interest rate that the borrower will pay on a loan. In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way as a form of consumer protection. APR is intended to make it easier to compare lenders and loan options.