| Annual Percentage Rate | Annual Percentage Yield | |
|---|---|---|
| Definition: | Annual Percentage Rate (APR) is an expression of the effective interest rate that the borrower will pay on a loan, taking into account one-time fees and standardizing the way the rate is expressed. | Annual Percentage Yield (APY) expresses an annual rate of interest taking into account the effect of compounding, usually for deposit or investment products. |
| Transaction costs: | Transaction costs and fees are taken into account when calculating APR. | APY does not take transaction costs into account. |
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