What is APR in banking and loan servicing?

APR referes Annual Percentage Rate. This is the specific interest rate or finance cost over the course of the year that one needs to pay if he takes out a loan from a financial institutions or applicable on credit purchases. 

Annual Percentage Rate (APR) is a tool for understanding the cost of a loan, whether it's a credit card or a mortgage. Although APR is not perfect, it gives you a nice standard for comparing interest and fees from different lenders. APR allows you to evaluate the cost of the loan in terms of a percentage.

With mortgage loans- APR is complicated because it does include more than just your interest charges. Any quotes you get might or might not include closing costs that you’ll have to pay or other payments required to get your loan approved (such as private mortgage insurance). Lenders have the ability to choose whether or not certain items are part of the APR calculation, so you have to look closely if you’re comparing loans.

You can’t simply rely on an APR quote to evaluate a loan. You need to look at each and every charge and expense related to your prospective loan in order to judge whether or not you’re getting a good deal.