annual percentage rate

annual percentage rate
(% APR)
   a unit used in the U.S. for stating interest rates and rates of return on investment. By federal regulation, these rates can be stated however a financial institution wishes, but they must be stated also in % APR so that consumers can compare rates of different loans and investment opportunities. Mathematically, the natural rate r of return on money is the "instantaneous" rate, the rate that allows for compounding of interest continuously. The APR is the percentage growth rate a of the money over a period of one year, as if interest were compounded annually. The two rates are related by the formulas a = er - 1 and r = ln (1 + a), where er is the natural exponential function and ln is the natural logarithmic function.

Dictionary of units of measurement. 2015.

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  • annual percentage rate — noun : a measure of the annual percentage cost of consumer credit (as in installment buying or a charge account) that is required by law to appear on statements of credit accounts and is variously computed but always takes into consideration the… …   Useful english dictionary

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  • annual percentage rate — (Banking) percentage rate of yearly interest on credit and loans (according to the law the lender must indicate the rate), APR …   English contemporary dictionary

  • annual percentage rate — The actual cost of borrowing money, expressed in form of annual interest rate to make it easy for one to compare cost of borrowing money among several lenders or sellers on credit. Full disclosure of interest rate and other charges is required by …   Black's law dictionary

  • annual percentage rate — The actual cost of borrowing money, expressed in form of annual interest rate to make it easy for one to compare cost of borrowing money among several lenders or sellers on credit. Full disclosure of interest rate and other charges is required by …   Black's law dictionary

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