What is APR on a Car Loan
When you're shopping for a car loan, one of the most important terms to understand is the APR , or Annual Percentage Rate . You might see a loan offer with a seemingly low interest rate, but unless you know the full APR, you won’t have a complete picture of what the loan will actually cost you. So, what is APR on a car loan , and why does it matter so much? APR is a key factor that affects your monthly payments, total interest paid, and overall affordability of a car loan. Let’s break it down in detail. Understanding APR: What It Really Means APR (Annual Percentage Rate) is the total cost of borrowing money for a car loan, expressed as a percentage on an annual basis. Unlike just the interest rate, APR includes additional charges such as: Loan origination fees Processing fees Dealer fees Any other lender-imposed costs In short, APR gives you the true annual cost of your auto loan , not just the base interest rate. For example: A car loan with a 5% interest rate might actua...