What is the difference between interest rate and APR?

The interest rate is the annual rate the lender charges on the amount you borrow. It determines your monthly principal and interest payment. APR (annual percentage rate) includes the interest rate plus certain upfront fees (e.g. origination) spread over the life of the loan.

Lenders disclose both on the Loan Estimate. Because APR incorporates some fees, it can help you compare the total cost of borrowing across lenders. A loan with a slightly higher rate but lower fees might have a lower APR.

APR doesn’t include every fee (e.g. title, appraisal) and assumes you keep the loan for the full term. If you refinance or sell sooner, your effective cost may differ. Still, APR is a useful comparison metric.

When comparing quotes, look at both rate and APR. Enter each lender’s numbers into a comparison view so you can see how they differ.