What does Annual Percentage Rate – APR- mean?

In the financial world the Annual Percentage Rate has become an instrument which must be quoted in order for the individual to be able to make his own comparisons. Many times it has the role of a reverse psychology method, as by quoting the APR, this makes it possible to show lower rates which might get very appealing to the customer.

Practically, the lower the monthly rates for example, the higher the APR one has to pay for will be. At the first glance it is very inviting to pay low rates, but if one makes the whole calculations, taking into consideration the APR as well, the conclusion is that it is more appealing to accept higher rates which actually trigger a lower APR.

This is a situation which applies generally for all the lending instruments we know of, such as credit cards, personal loans, mortgages and many others. The APR quoted usually at the end of a document, or with small characters so that it is not too obvious, is the instrument by which you can calculate the whole amount owed with all the interests and other additional fees and charges added. Conclusively, always take into your calculations the displayed APR percentage as well.