Financial Glossary
APR (Annual Percentage Rate)
APR represents the total annual cost of borrowing money, including the interest rate plus any fees or additional costs associated with the loan. It is expressed as a percentage and provides a more complete picture of loan costs than the nominal interest rate alone. APR is standardized, making it easier to compare loan offers from different lenders.
Example
A mortgage with a 6.0% interest rate and $3,000 in origination fees might have an APR of 6.3%. The APR is higher than the interest rate because it spreads the fees across the loan term. When comparing mortgage offers, the lower APR typically represents the better deal, assuming all other terms are equal.
Frequently Asked Questions
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal, while APR includes the interest rate plus lender fees, points, and other charges. APR is always equal to or higher than the interest rate. Use APR to compare total loan costs between lenders.
Why do lenders show both interest rate and APR?
APR provides a standardized way to compare loan costs including fees. Federal law requires lenders to disclose APR so borrowers can make informed comparisons. The interest rate determines the monthly payment, while APR reflects the total cost.
Related Resources
Official Sources
Canada calculators use data from the following official government agencies:
- Canada Revenue Agency (CRA) — Federal and provincial income tax rates, CPP contributions, and RRSP limits.
- Statistics Canada — Employment data, income statistics, and housing market data.
- Bank of Canada — Interest rates, inflation data, and mortgage rate benchmarks.
Methodology
Our Canadian calculators use federal and provincial tax brackets, CPP/QPP contribution rates, and EI premiums published by the Canada Revenue Agency (CRA). Economic data is sourced from Statistics Canada. Mortgage calculations use Bank of Canada rates and market averages. All figures are for educational purposes.
Data Sources
All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.
Last updated: June 2026. Information may change; always verify with official sources.
Last Updated: June 2026 — Reviewed Against Official Sources