3. What is the purpose of APR when considering a loan? 1. APR is the total amount of interest you pay over the life of the loan. 2. APR is a standardized measure of the cost of a loan, including intere 3. APR is the monthly interest rate charged on a loan. 4. APR is the amount of money you borrow from a lender.

The correct answer is **2. APR is a standardized measure of the cost of a loan, including interest.**<br /><br />Here's why:<br /><br />* **APR (Annual Percentage Rate)** takes into account not only the interest rate but also other fees and charges associated with the loan. This allows borrowers to compare different loan offers on an apples-to-apples basis, even if they have different fee structures.<br /><br />Let's look at why the other options are incorrect:<br /><br />* **1. APR is the total amount of interest you pay over the life of the loan.** This describes the *total interest*, not the APR. While related, the APR is a *rate* expressing the yearly cost, not the total accumulated interest.<br />* **3. APR is the monthly interest rate charged on a loan.** APR is an *annual* rate, not a monthly one.<br />* **4. APR is the amount of money you borrow from a lender.** This describes the *principal* of the loan, not the APR.<br />