APR vs interest rate: what's actually different?
Two loans can have the same interest rate and very different APRs. Here's why APR is the number to compare.
3 min readReviewed May 1, 2026
Quick answer
Interest rate is the cost of borrowing the money. APR is interest plus most required fees, expressed as a yearly percentage — the closer-to-honest cost of the loan.
Side by side
Interest rate
- Just the cost of the borrowed money.
- Used to calculate your monthly payment.
- Lower-looking — no fees baked in.
APR
- Interest + most required lender fees.
- Standardized for comparison across lenders.
- Almost always higher than the interest rate.