# APR (Annual Percentage Rate)

> APR (Annual Percentage Rate) is the total yearly cost of borrowing expressed as a percentage, combining the interest rate with most required fees so you can compare different financing offers on an apples-to-apples basis.

## Key takeaways
- APR expresses the total yearly cost of borrowing as a single percentage, combining the interest rate with most required fees, so it usually runs higher than the stated rate.
- Because it standardizes cost, APR lets you compare term loans, lines of credit, and other products on an apples-to-apples basis.
- Short-term products can show deceptively high APRs, and not every cost is captured, so always read the full terms.

## How APR works

APR, or **Annual Percentage Rate**, expresses what a loan actually costs you
over a year as a single percentage. It rolls the **interest rate** together with
most **required fees** — such as origination or processing fees — into one
number. Because it includes those fees, APR is usually **higher than the quoted
interest rate**, and it gives you a more honest picture of the total cost.

### Why APR matters

Lenders structure financing in many different ways: some charge low interest but
high fees, others do the reverse. Comparing only interest rates can be
misleading. APR was designed to cut through that noise so borrowers can compare
offers fairly.

### A concrete example

Suppose you borrow **$50,000** for one year at a **10% interest rate** with a
**$1,500 origination fee**. You'd pay roughly **$5,000** in interest plus the
**$1,500** fee — about **$6,500** in total cost. Expressed as an APR, that's
closer to **13%**, not the 10% interest rate alone. Two loans with the same
interest rate can have very different APRs once fees are included.

### What to watch for

- **Short-term products** can carry deceptively high APRs because fixed fees are
  spread over only a few months.
- **Not every cost is captured** in APR — late fees, prepayment penalties, and
  some third-party charges may sit outside it, so always read the full terms.
- **Fixed vs. variable:** a variable APR can rise if it's tied to an index like
  the prime rate.

When you compare financing through Hoss Capital, asking each lender for the APR
(not just the rate or a factor rate) is the fastest way to see which offer is
truly cheaper.

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Canonical: https://hoss-capital.pages.dev/glossary/apr/