Definition
APR is a nominal annual interest rate used to describe the cost of borrowing or the return on a product. APR does not directly include the effect of compounding.
How to use it
- APR is often used as a standardized comparison, but fees and structure can still matter.
- Convert APR to APY to compare effective annual yield under compounding.
Why this matters
This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.
Practical checklist
- Write a 1-line definition for "APR (Annual Percentage Rate)" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., APR to APY Calculator) to sanity-check assumptions.
- Read the related guide (e.g., APR vs APY: how compounding changes the effective rate) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- APR to APY Calculator: Convert APR to APY (and APY to APR) given compounding frequency.
- Loan Payment Calculator: Compute monthly payment, total interest, and total paid for a loan using amortization.
Guides
- APR vs APY: how compounding changes the effective rate: A practical guide to APR vs APY: what each means, how to convert between them, and common comparison mistakes.
- Loan amortization: how monthly payments and total interest work: A practical guide to loan amortization: monthly payment formula, why interest dominates early, and how term and rate affect total interest.
- Interest expense: definition, formula, and how to calculate: Interest expense explained: what it is, the formula, how to calculate it, and how net interest expense works.
- Capital budgeting hub: NPV, IRR, payback, and investment decisions: A practical hub for capital budgeting: use NPV, IRR, discounted payback, and profitability index together (and avoid relying on a single metric).