The rate of interest charged by a creditor on an annual basis.  The Federal Truth in Lending Act of 1968 requires lenders to calculate the cost of credit as an annual percentage and disclose the APR in large type in the loan application documents.  The APR disclosure helps borrowers compare the cost of alternative loans.  (To determine monthly interest divide the APR by 12; for example if the APR is 18% of an unpaid balance of $1,000 then the monthly interest is 1.5%, or $15.  No interest is added during a grace period).