What is the impact of the "annual percentage rate" on consumer borrowing decisions?

The annual percentage rate (APR) plays a crucial role in consumer borrowing decisions by providing a clear and standardized measure of the cost of credit. APR encompasses not just the interest rate on a loan but also any additional fees associated with the loan, allowing consumers to assess the total cost of borrowing over the loan's term. This comprehensive view enables borrowers to compare different loan offers more effectively, ensuring they make informed choices that align with their financial situations and goals.

In contrast, while the duration of loan repayment is indeed important, the APR itself does not dictate how long a borrower will take to repay the loan. It's also not true that APR is only relevant for mortgage loans; it applies to various types of credit, including credit cards and personal loans. Lastly, APR does not guarantee loan approval; rather, it serves as a tool for understanding the cost of borrowing, with approval being contingent on various other factors such as creditworthiness and income.