What is APR on a car loan?

I've been looking at some car loans and I want to make sure I understand the terminology. What is APR on a car loan? How is it different from the interest rate?

Answer
The APR of a car loan stands for annual percentage rate. In most instances, the APR is what a lender advertises, as it’s a more accurate depiction of what you pay on a car loan compared to the interest rate.
If you look at both the interest rate and the APR, you should notice that the APR is higher. This is because the APR factors in what you pay for taxes, fees, and any other charges rolled into the loan. An interest rate doesn’t account for any of these extra fees. It’s simply the amount of interest you’re paying on the loan.
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Eric Schad
Answered on Nov 23, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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