What Is APR, Really?
APR (Annual Percentage Rate) is the all-in measure of borrowing costs, including both the interest rate and most fees. In subprime lending, this distinction matters because lenders may advertise a “low” interest rate while burying fees in the fine print.
Why APR Matters
If Loan A has 25% interest and $200 in fees, while Loan B has 30% interest but no fees, Loan A might look cheaper at first—but its APR could be much higher.
How to Compare APR
- Always ask for the APR, not just the interest rate.
- Compare total repayment, not just monthly payments.
- Look for maintenance or draw fees on lines of credit—they often aren’t obvious.