Dictionary of Real Estate Terms: annual percentage rate
annual percentage rate
the effective rate of interest for a loan per year, disclosure of which is required by the truth-in-lending Law.
Example: Abel gets a loan for $50,000 at 8% interest plus 2 discount points, payable over 30 years. Because of the discount points $49,000 has been effectively borrowed but $50,000 must be repaid with 8% interest on $50,000. Considering the effective amount borrowed, the annual percentage rate is 8.21%.
