How to Get the Best APR Interest Rate
One type of interest rate is APR (Annual Percentage Rate). The other type of interest rate is interest only, meaning that there are no interest charges after the introductory period. The term ‘annual percentage rate’ refers to a constant interest rate, usually of a fixed term, and not to an ongoing rate/monthly rate, as applied on an account, loan, credit card, or so on. It’s also called the annual interest rate, or simply APR. It’s a finance charge paid to the lender as a lump sum, every month, for a full year.
The introductory interest rate lasts only for a short while. During this time, the APR is usually higher than a standard interest rate, because of the’teaser ‘rate’. This rate allows borrowers to lock in at a low interest rate, without paying normal interest rates during the introductory period. After the introductory period, the regular interest rates will start to apply, and the money borrowed will be returned to the lender, along with the APR. So, borrowers must repay as much as possible in the first few months, in order to recoup as much interest as possible.
Borrowers will find it confusing if APR is written on the bill, since it’s billed as an ‘interest only’ payment, even though it is technically not ‘interest-only’ in the eyes of the biller. In some cases, the amount of APR written on the bill could be higher, depending on what was written on the bill, but it doesn’t always mean that the final loan amount will be lower. It is best to make sure that all bills, such as credit cards, loans, mortgages, and so on, are written accurately. If a bank or credit union doesn’t have an accurate bill, they may incorrectly charge you an APR, which could make it harder to repay your loan.
In order to get the best possible interest rate, it is advisable to let several lenders give you their quote. You can then compare those quotes and choose the best one for your needs. You can also look around at what the banks have on offer, as well as the current interest rates. You don’t necessarily have to go with the interest rate that is advertised by the bank or credit union; rather, you should consider ‘the good’ deals that they have to offer and go with those.
You’ll need to consider a number of factors when considering an APR for your loan. The amount of interest you will pay is one of the most important things to consider. Since the APR is determined based on the loan amount, and the term of the loan (in days, months or years), the longer the loan term, the higher the interest rate. For instance, if you take a thirty-year loan term, and use it to borrow twenty thousand dollars, the interest will be around six percent. However, if you borrow the same amount, but use it for just four days, your APR will be just two percent.
Another factor that can affect your interest rate is the type of payment you choose to make. APR is figured on the amount of interest you charge plus the balance that you pay back each month. If you choose to make a balloon payment that will balloon up to thirty years at a time, you will end up paying much more interest than if you choose to pay the entire balance each month. You can lower your payment amount by reducing your interest each month, but this will make your monthly payments higher, and your principal payment will also increase.
It’s worth remembering that interest rates will never decrease. Even if a bank or other lender charges the lowest APR on your loan they are still using the same interest rate they charged last year, and if they raise their rates, they will charge the same rate. That’s why it is wise to shop around before you commit to an interest rate. Some banks will offer reduced interest rates to bring in new customers, and some will increase the APR to match their competitors.
If you find that APR is too high, don’t be afraid to negotiate. If your interest rate has been increased dramatically, you may have to pay more in ‘penalty’ fees if you decide to refinance, so be aware of all the costs involved. Remember that once you have your new loan in place, your lender will want you to stick with it and pay off the loan by the terms agreed upon, so be sure you can afford it.