APR, How It Affects Your Loans and How to Lower APR
By and large, APR happens to be one of the elements of loans and credit facilities that really robs us of money and lots of it as a fact but has not been noted by many. As such, if you look forward to unlocking the doors to financial freedom, one thing that you need to look into is your APR. One of the things that having a lowered APR allows you is the fact that it gets you such an opportunity to bear much lesser costs for your loans.
By far and large, for far too many of us, this proposition may sound too good to be true but the fact is that there are a lot of mathematical facts that support this and by crunching up the figures on your loans, you get to see this with so much clarity. This is when you look at the fact that with just a 0.25% difference on instruments such as mortgages, you can see these add up to over $4000 over the life of the loan.
If you wish to know how it is that you will be able to make such significant savings by lowering your APR, find out all on this in this post as has been outlined following.
The first question that may be worth answering is what APR actually happens to be. Precisely defined, APR is the annual percentage rate and it is the index that defines the much it is going to cost you to take out a loan or borrow money for a year’s time. As for an example, consider a case where you are planning to take a personal loan whose worth is $10000 and you have an APR fixed at 8%. In such an instance, you notice that on every $100 borrowed, you will be paying in interest for every $1000 for the 12 months. At the end of the repayment and having served it in time, you will have paid $960 in interest for the $10000 borrowed. Read on and see some of the things that happen to determine one’s APR.
The first step that needs to be taken when it comes to the need to lower APR is to know what they are that actually determine the index. In most cases, when you go to a bank for a loan, they will basically look at two things and these are your ability to pay back the loan and your credit score. In all these factors, when determining your APR, the one that will play a major role in this regard is your credit score. In this regard, it is good enough to note the fact that the APR and the credit score have an inverse relationship in which case it remains to be that with a higher credit score, you have a lower APR and a lower credit score gets you a higher APR.