Glossary

APR (annual percentage rate)

The yearly cost of financing including interest and most fees.

APR expresses the cost of credit as a yearly rate on the balance outstanding, including interest and most fees. Loans and lines quote it; advances do not, because they are priced with factor rates. Converting an advance to an estimated APR (using stated assumptions about payment timing) is the only way to compare it with a loan on the same footing. Statutory APR disclosures required in some states for commercial financing may use their own conventions.

How it appears in a contract

Loans state an APR in the disclosure or note. Advances usually do not; California and New York commercial-financing disclosure rules require an APR-style figure for covered offers.

Worked example

Our calculator converts the example advance above to about 98% nominal (weekly rate × 52). A term loan at 12% APR with a 3% fee is directly comparable to that number.

Illustrative figures on stated assumptions; not quotes.

What to ask

• Does the APR include origination and closing fees?
• For an advance, what assumptions produced the estimated APR?
• Does paying early reduce the cost (loan) or not (advance)?

Related terms

Factor rate · Origination fee · Total payback · all terms