The interest rate on a loan is the nominal rate charged. So on a 5% loan, the interest rate is 5%. But if there are closing costs involved, you need to add those into the total "cost" of the loan. This will drive up the APR.
For example, if you have a $250,000 30-year mortgage, 5% interest rate, with $5,000 in closing costs, the APR will work out to roughly 5.18% (because of the addition of $5,000 in closing costs).
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