How is the Annual Percentage Rate (APR) expressed?

The Annual Percentage Rate (APR) is expressed as a percentage that includes not only the interest rate on the principal but also incorporates any additional costs involved in obtaining the loan. This includes points, mortgage insurance, and other associated fees that a borrower is required to pay, which gives a more comprehensive understanding of the total cost of borrowing over the life of the loan.

This holistic approach allows consumers to compare the true cost of different loan offers, as it reflects the total charges expressed as an annual rate. Therefore, when you see the APR, it helps you understand what you will actually pay over the course of the loan, making option C the correct choice.

In contrast, expressing APR solely as a fixed amount or just the interest on the principal does not provide the full picture of the borrowing costs. Similarly, stating it only as a monthly interest rate limits the understanding of the total annual costs associated with the loan. Thus, option C is accurate in capturing the comprehensive nature of how APR is determined and presented.