Is APR an estimate of the loan cost expressed as a yearly rate assuming all payments are made as scheduled?

APR, or Annual Percentage Rate, is indeed an estimate of the loan cost expressed as a yearly rate, which assumes that all payments will be made as scheduled. This rate includes not only the interest charged on the loan but also any additional costs or fees associated with the borrowing. By providing a standardized measure, APR allows consumers to compare the cost of different loan products more easily.

Its calculation assumes that the borrower will make the required payments on time and in full for the entirety of the loan term. This makes it a valuable tool for understanding the overall cost of borrowing over a year, facilitating an informed decision when choosing a loan.

Other options are misleading, as APR applies broadly to various types of loans, including both fixed-rate and adjustable-rate loans, while also being consistent regardless of different lenders' policies. This universality and standardization make the statement that APR is an estimate of the loan cost expressed as a yearly rate, assuming all payments are made as scheduled, accurate.