Borrowing Basics
APR (Annual Percentage Rate)
Quick Definition
The true yearly cost of borrowing, including fees and interest.
Full Explanation
APR, or Annual Percentage Rate, is the total yearly cost of borrowing money expressed as a percentage. Unlike a simple interest rate, APR includes additional costs such as origination fees, mortgage insurance, and other charges. In Canada, lenders are legally required to disclose APR under the Cost of Borrowing Regulations, making it the most reliable way to compare loan offers side by side. A loan with a 7% interest rate but high fees may have an APR of 9%, meaning it is actually more expensive than a loan with an 8% interest rate and no fees.
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