The correct answer is the Nominal interest rate. Interest rates on consumer loans are typically quoted as the annual percentage rate (APR). This is the rate of return that lenders demand the ability to borrow their money. For example, the interest rate on credit cards is quoted as an APR. Additional Information In the context of borrowing, the principal is the initial size of a loan; it can also be the amount still owed on a loan. APR, or annual percentage rate, is the yearly cost of borrowing. It generally includes interest as well as fees and other charges tacked onto the principal amount you owe.