What's the difference between the interest rate and the APR on a car loan?

"While shopping for car loans, I've noticed that lenders quote an interest rate, APR, or both.

What do these two rates mean?"

Answer
“The interest rate is the percentage of the principal your lender charges you for borrowing the loan.
The APR, or annual percentage rate, includes interest plus fees that start accruing on the first day of your loan.
Generally speaking, if you want to know what you’re actually paying, calculate the APR.”
avatar
Eric Schad
Answered on Jun 10, 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.
thumb-up

Did this answer help you?

Ask us a question by email and we will respond within a few days.
thumb-up

Have a different question?

You can meet us at our office and discuss the details of your question.

Read advice from car experts at Jerry

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free