What is the difference between the interest rate and the APR?

The interest rate is the yearly cost of borrowing the money itself. The APR (annual percentage rate) is a broader measure that also includes points, broker fees, and other loan charges, so it is usually higher. The CFPB says APR is useful for comparing similar loans, with some limits. An adjustable-rate loan's APR does not show the highest rate the loan could reach. Fixed-rate and adjustable-rate APRs should not be compared directly. A closed-end loan's APR should not be compared with a home equity line of credit's APR on that figure alone. On a mortgage Loan Estimate, the interest rate appears on page 1 and the APR on page 3 under Comparisons.

Sources

• What is the difference between a mortgage interest rate and an APR?Consumer Financial Protection Bureau