Explain the Difference Between APR and Interest Rate on a Loan

Two loan adverts, two different numbers labelled interest rate and APR, and no clear sense of which one actually matters. This explains what each figure includes, why APR is almost always the higher number, and which one to actually compare when shopping around.

Explain, in plain English, the difference between a loan's interest rate and its APR (Annual Percentage Rate). Cover what each figure includes, why APR is usually the higher number because it bundles in fees and charges, and why APR is the number to use when comparing loans from different lenders. Use one short worked example with made-up figures to show how the same loan can have a lower interest rate but a higher APR once fees are added. Keep the explanation to around 150 words and avoid financial jargon without explaining it first.