Home » Interest » Difference in Interest Rate and Annual Percentage Rate (APR)

# Difference in Interest Rates and Annual Percentage Rate (APR):

## Definition of Annual Percentage Rate (APR):

"The percentage cost of borrowing per year, including interest fees".

For example:

A \$1000 loan repaid in its entirely after one year with \$80 interest plus a \$10 service fee, has a total finance charge of \$90, and so has an APR of 9%.

## Pure interest can differ due to difference in the distances of the money market. It is the desire of every money lender to reduce the risks of non-payment of money. So they will prefer to invest their amounts near at home at a lower rate of interest than at a higher rate of interest at a long distance. Difference in Size of Loan:

Pure interest/net interest can also differ due to the differences in the amount of loan demanded. The higher the amount demanded for loan, the higher the rate of interest and vice versa.

## Relevant Articles:

 » Definition of Interest » Analysis of Gross Interest » Difference in Interest Rates and Annual Percentage Rate (APR) » Difference in Gross Interest Rates » Theories of Interest/Why is Interest Paid

 Principles and Theories of Micro Economics Definition and Explanation of Economics Theory of Consumer Behavior Indifference Curve Analysis of Consumer's Equilibrium Theory of Demand Theory of Supply Elasticity of Demand Elasticity of Supply Equilibrium of Demand and Supply Economic Resources Scale of Production Laws of Returns Production Function Cost Analysis Various Revenue Concepts Price and output Determination Under Perfect Competition Price and Output Determination Under Monopoly Price and Output Determination Under Monopolistic/Imperfect Competition Theory of Factor Pricing OR Theory of Distribution Rent Wages Interest Profits
 Principles and Theories of Macro Economics National Income and Its Measurement Principles of Public Finance Public Revenue and Taxation National Debt and Income Determination Fiscal Policy Determinants of the Level of National Income and Employment Determination of National Income Theories of Employment Theory of International Trade Balance of Payments Commercial Policy
 Development and Planning Economics Introduction to Development Economics Features of Developing Countries Economic Development and Economic Growth Theories of Under Development Theories of Economic Growth Agriculture and Economic Development Monetary Economics and Public Finance History of Money