In financing a vehicle on an installment sales contract, what does APR stand for?

The term APR stands for Annual Percentage Rate. This is a crucial concept in financing as it represents the annual cost of borrowing expressed as a percentage. The APR encompasses not only the interest rate on the loan but also any associated fees or costs that may apply, allowing consumers to understand the true cost of financing over a year.

When evaluating loan options, knowing the APR helps buyers compare different financing offers, as it provides a standardized measure of the cost to borrow. Unlike other terms that might be suggested in the choices, such as Annual Payment Rate or Average Price Rate, the annual percentage rate specifically reflects the total annualized cost when financing a vehicle, making it the most relevant and informative measure in this context.