What does APR stand for in financial terms?

APR stands for Annual Percentage Rate, which is a crucial concept in personal finance. It represents the annual cost of borrowing money or the annual return on an investment, expressed as a percentage. The value includes not just the interest rate, but also any additional fees or costs associated with the loan or investment, providing a more comprehensive picture of what an individual will pay or earn over the course of a year.

By using APR, consumers can better compare different loan offers or investment products, as it standardizes the cost of borrowing or the yield on investments, allowing for informed financial decisions. Understanding APR helps consumers gauge the true cost of debt and understand the implications of interest rates on personal finances.