What does the term "annual percentage rate" refer to in financing advertisements?

The term "annual percentage rate" (APR) in financing advertisements refers to the overall cost of finance charges expressed annually. This means that the APR provides a clear and comprehensive representation of the total cost associated with borrowing money over the course of a year, including interest and any related fees. It allows potential buyers to understand how much they will pay to borrow money for a vehicle, making it easier to compare financing options across different lenders.

When consumers see the APR in advertisements, they can gauge the affordability of financing a vehicle, as it reflects the effective interest rate over a yearly period, encompassing the entire cost of financing. This transparency helps consumers make informed decisions about their financing choices without being misled by lower upfront rates that may not include additional fees or costs.