What does APR stand for?

The correct answer is C, which stands for Annual Percentage Rate. The Annual Percentage Rate is a critical term in lending that represents the yearly cost of borrowing expressed as a percentage of the loan amount. It includes not only the interest rate on the loan itself but also encompasses other associated costs and fees, providing borrowers with a more comprehensive understanding of what they will pay over the life of the loan.

This measure is essential for borrowers as it allows them to compare loan offers from different lenders on a level playing field. By providing the total cost of borrowing as a single percentage, consumers can make more informed decisions about which mortgage or loan terms will be the most beneficial.

In contrast, other options provided do not accurately define APR. For instance, 'Annual Payment Rate' and 'Adjusted Payment Rate' do not correspond to accepted financial terminology. Additionally, 'Average Principal Rate' misrepresents the concept, as APR does not focus solely on principal payments but on the overall cost of a loan, including interest and fees. Thus, the significance of Annual Percentage Rate lies in its ability to give borrowers a clear and standardized metric for evaluating the costs associated with loans.