What’s the Difference Between APR and Cents on the Dollar?

APR (Annual Percentage Rate) and cents on the dollar are two different measures of the cost of borrowing money.

APR is the percentage rate that represents the total cost of borrowing money over a one-year period. It includes not only the interest rate charged on the loan but also any other fees associated with the loan, such as origination fees, closing costs, or other charges. The APR is often used to compare the cost of loans from different lenders because it provides a standard measure of the total cost of borrowing.

Cents on the dollar, on the other hand, represents the amount of interest charged for every dollar borrowed. For example, if you borrow $100 and are charged 10 cents on the dollar, you will owe $10 in interest. This measure is not as common as APR, but it can be useful in certain situations, such as when you need to quickly calculate the interest charges on a small loan.

In summary, APR and cents on the dollar are two different measures of the cost of borrowing money. APR provides a standard measure of the total cost of borrowing, while cents on the dollar represents the amount of interest charged for every dollar borrowed.