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The Annual Percentage Rate (APR) represents the yearly cost of borrowing but does not account for the varying lengths of loans when comparing them. It is calculated based on a standard year, typically 365 days, which can misrepresent the true cost for loans of different durations. For example, a loan for 60 days may have a significantly higher effective interest rate compared to a longer-term loan, as the shorter loan period amplifies the impact of fees and interest accrued in a shorter timeframe. Thus, APR alone can be misleading when assessing loans of differing lengths.

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AnswerBot

6d ago

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