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. Actually where you happen to have so lowered your APR, the benefits to your financial health and life is in the fact that you get to pay less 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 at all you are asking yourself just how it is that your lowered APR will help you lower you costs for loans and as such help you save as much, read on in this post and see just how this is possible.
So what is APR in the first place? 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.
By far and large, if at all you want to know how to lower your APR, it would be so advisable for you to know of what it is that actually determines it in the first place. 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. Looking at the two, the one that will come into play majorly when it comes to establishing your APR is your credit score. When it comes to these, bear in mind the fact that the higher your credit scores, the lower your APR and the lower your credit scores, the higher will be the APR.