An interest rate will be lower because it is only the yearly cost you pay to have borrowed X amount of money. The Annual Percentage Rate (APR) is higher because it includes the interest rate plus those pesky loan fees associated with a loan. Depending on if it’s a car or mortgage loan, the fees could include origination fees, mortgage insurance, & some closing costs. This truth means a lower interest rate doesn’t automatically make it the best choice as that loan may come with higher fees, making the overall loan (the APR) not so attractive after all. So, watch out.