What does "APR" mean?

What does "APR" mean?

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The APR or the Annual Percentage Rate is the percentage you'll be paying to the lending agency, whether that's the financing company through the dealership or through your bank, or through your credit union. That's the cost, if you will, of borrowing that big lump sum of money from them and then paying them back over time. Knowing the APR is very important when you buy a car because that is what is going to be accumulating beyond the actual price of the vehicle itself. So, if you buy a vehicle for $10,000, you're going to be paying that money back plus whatever the APR is on top of that. Most people will go into buying a car thinking what their monthly payment is, and where their threshold is just on monthly payment. But the APR can then start to add up on you, especially if in order to get that payment down to a certain level, you'll add an additional year of interest to it. So maybe you're looking at a three-year loan, it goes out to four years in order to get that payment down. Well you need to know how many years that term is, and what the APR is, to see how much you're really going to be spending for that vehicle over the time you have the loan.