# Annual Percentage Rate Definition

In finance, **APR**, abbreviated as the **annual percentage rate**, is the **yearly amount of interest charged by investors or banks** to the **borrowers or loan takers**.

APR is calculated and represented in percentage, it expresses the exact fund's yearly cost by determining the income earned from an investment.

In addition to this, The APR not only reflects the rate of interest you have to pay, but also evaluates the fee you have to bear to take the loan.

**Note:**

To know about annual percentage yield, you can use our Annual Percentage Yield Definition.

For more prices, understanding let us have a look at a short example.

Suppose a $1000 loan is returned after one year by a borrower with the interest of $80 excluding a service fee of $10, it means a net additional charge bear by a loan taker is $90, and then the APR of a consumer is 9%.