Which of the following statements is true regarding APR?

The annual percentage rate (APR) is a comprehensive measure that indicates the total cost of borrowing on a loan and is expressed as an annualized interest rate. This means that it reflects not only the interest charged on the principal amount of the loan but also includes other finance charges, such as loan origination fees and any other costs associated with securing the loan. By providing a single percentage that represents the total cost of borrowing over a year, the APR allows consumers to compare different loan offers more easily, enhancing transparency in lending.

The other statements are not accurate in the context of what APR truly represents. While APR indeed takes into account a variety of costs associated with borrowing, it is not limited to being expressed only as a monthly rate, applied universally to all types of credit transactions, or based solely on the principal amount of the loan. Thus, understanding that APR encompasses the total interest and related costs is fundamental to grasping its role in consumer lending practices.