APR — annual percentage rate — expresses the yearly cost of borrowing as a single percentage that includes interest plus the fees required to take the loan.
Its purpose is comparability: two loans with the same headline interest rate can cost very different amounts once arrangement fees and insurance are counted, and APR is designed to expose that. It still has limits — it assumes the loan runs its full term, and it does not capture penalties for late or early payment. When comparing offers, the APR is the more honest number than the advertised interest rate.