What is the meaning of APR?

APR means Annual percentage rate. A term defined in consumer credit legislation with the intention of providing a standard basis for comparing different forms of credit. It has had limited success and can be confusing. For example, case law has established that a lender can quote a mortgage' APR' based on a short-term fixed rate without including in the calculation the fact that, at the end of the fixed rate period, the rate will change. The allowable assumption is that the rate will continue throughout the mortgage term. The calculation must however include the' total charge for credit' which includes such things as arrangement fees, valuation fees etc and so does have some merit. The concept is overdue for overhaul and redefinition.