APR versus interest rate
The interest rate is the cost of the money. APR folds in certain additional finance charges, so two loans with the same interest rate can have different APRs. When comparing offers, compare APR to APR over the same term.
CAR BUYING RESOURCES · BY MIKE
What is APR on a car loan?
APR — annual percentage rate — is the yearly cost of borrowing expressed as a percentage. It includes the interest rate plus certain finance charges, which is why it's a better comparison tool than the interest rate alone.
What influences the APR you're offered
- Your credit profile
- The loan term
- Whether the vehicle is new or used, and its age
- Your down payment and amount financed
- Any manufacturer special financing programs currently available
Keep reading
Written by Mike, Your Dallas Car Guy. General information only, not financial or legal advice. Financing is subject to lender approval. Last updated 2026-09-07.