The Annual Percentage Rate is the Annual Rate of interest charged for borrowing or earned through an investment, it’s the percentage of the principal the buyer pays each year by taking monthly payments into account.

A fixed payment amount made by borrower to a lender at a specific time/date each month, paying off through monthly installments with both interest and principal implied every month over a specific number of years until the end of their loan.

This payment method allows a buyer to take a sum amount of payment attached to a loan for a short term which can be extended by the bank, providing a strong cash flow before the loan term expires. It’s the lump sum payment that is paid towards the end of the term allowing the buyer to save on the interest cost of the interest outflow every month.