APR, or annual percentage rate, is an important term to know when borrowing, especially in case of home loans. The APR is generally the annual cost of a loan to a borrower, including fees. Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees, to indicate the total cost of the loan. The APR is normally stated when you get into borrowing through a home loan or when a credit card is issued to you. Knowing the APR is important because it means you will know what you are actually paying for.

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