Which statement is true about annual percentage rate (APR)?

Question

A. It is equal to the interest rate times the principal
B. It is a simple way to compare all the various elements of different loans
C. It is of little interest to the average borrower
D. It is reduced every time you make a payment

Answer 1

The correct statement about annual percentage rate (APR) is:

B. It is a simple way to compare all the various elements of different loans.

APR provides borrowers with a standardized measure of the cost of borrowing, including both the interest rate and any additional fees, allowing for easier comparison between different loan options.