What is Annual Percentage Rate (APR)?
Annual Percentage Rate (APR) is the all-in annual cost of borrowing, expressed as a percentage of the loan amount. APR includes both the interest rate charged on the principal and fees the lender adds at origination — so it gives a single number that reflects what the loan actually costs over a year.
APR exists because two loans with the same headline interest rate can cost very different amounts once fees are factored in. Comparing APRs lets you compare lenders on equal footing.
How APR Works for Crypto-Backed Loans
For a crypto-backed loan, APR is typically calculated as:
APR = Interest Rate + Origination Fee (annualized)
For example, a $100,000 12-month loan at a 9.00% interest rate with a 1.49% origination fee has:
- Interest cost: $9,000 per year
- Origination fee: $1,490 (one-time, deducted at origination)
- Effective APR: 10.49%
Because the origination fee is a one-time charge, APR slightly overstates the true cost on loans held for longer than 12 months — and slightly understates the cost on loans held for less than 12 months.
APR vs. Interest Rate
Two terms are commonly confused:
- Interest rate is the annual cost of borrowing the principal — it does not include fees.
- APR is interest rate plus annualized fees — the total cost of credit.
Always compare lenders on APR, not interest rate, when fees are involved.
APR vs. APY
APY (Annual Percentage Yield) is APR with compounding factored in. Crypto-backed loans use simple interest with no intra-year compounding, so APR and APY are typically identical for these products. APY matters more for savings accounts and yield products than for borrowing.
How Arch Lending’s APR Works
Arch publishes a tiered APR card based on loan size — larger loans get lower interest rates and lower origination fees, so the all-in APR drops as size grows. Floor APR is 7.25% for loans over $5M (custom quote). Loans under $250K start at 10.49% APR.
All Arch loan rates are fixed at origination — the APR you see when you open the loan is the APR you pay for the entire term, regardless of how rates move in the broader market. There are no prepayment penalties, so paying down principal early reduces total interest cost without further fees.
For the current rate card across all tiers, see crypto loan rates.