What is APR, and how is it determined?
APR represents the yearly cost of borrowing, including interest and lender fees. It helps consumers compare loan offers on equal terms. Your APR depends on factors such as credit score, loan term, vehicle age, and market rates. A lower APR means paying less interest over the life of the loan.
Quick Summary
APR is annual borrowing cost; influenced by credit, loan term, and fees.
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Answered by Annie Brockway
Last updated 12/5/2025, 3:49:24 PM
APR—annual percentage rate—is the yearly cost of borrowing money. It includes the interest rate plus lender fees and is expressed as a percentage. APR allows you to compare loan offers on equal terms.
Your APR is influenced by factors such as your credit score, loan term, amount financed, the vehicle’s age and current market rates. A lower APR means you’ll pay less interest over the life of the loan.
- Interest rate: Base cost of borrowing
- Fees included: Lender fees, points or administrative charges
- Determining factors: Credit, term, loan amount and vehicle age
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