The APR is the true cost of the loan. It includes the loan itself, plus other costs associated with the loan generation such as origination fees, points, mortgage insurance premiums, appraisals, prepaid interest, and other items.

The APR helps borrowers compare loans since loans have interest rates and costs.The higher the APR the higher the cost of the loan. The APR can be misleading, because all lenders don't use the same fees in calculating and arriving at the APR number. It is prudent to make sure the comparing APR's include similar fees.

Please note APR is for the life of the loan and if you keep the loan for a shorter period of time your cost will be different.