When you’re looking for credit, whether it’s a credit card or a type of loan, it’s important to look at the APR before making any decisions, as this will tell you how much you’ll have to repay overall. If you’re unsure about what APR is and how it’s calculated, check out this handy guide for a simple explanation. Understanding APR may seem really tricky, but once you have understanding of the basics it becomes much easier to make borrowing decisions. This is also important when guarantor loans low apr rates, or those that claim that their guarantor loans have a low apr.
APR stands for Annual Percentage Rate, which doesn’t really give away much about what it really means. However, if you break it down, you can get a basic idea. ‘Annual’ obviously means ‘yearly’. ‘Percentage’ implies that it’s referring to a portion of something, and ‘rate’ gives us the impression that it’s to do with some sort of monetary charge. So what does it really mean?
The APR basically shows you what you will pay in interest and fees in order to borrow money. It’s shown as a percentage of the money you borrow and is calculated on a yearly basis. With guarantor loans low apr rates lower, the less you will have to pay back overall. As a very simple example, say you borrow £1000 and pay it back over 1 year; if the APR on this loan was 30%, you would pay back a total of £1300. This extra £300 in interest and other fees would be calculated into your monthly repayments, so you’d pay back around £108.30 per month.
The Representative APR is something which all lenders must show on their advertising and their website if they are offering credit. This shows the most common example of what you would pay to borrow from them. At least 51% of the lender’s customers must be able to borrow at this rate for the lender to advertise it. Other applicants may be offered a higher rate should they not quite qualify for the original APR amount. Understanding APR as something which is not always guaranteed is important – you will have to decide if you’re happy to pay more should you be offered this option instead.
APR is calculated on a yearly basis only, so if your loan is repayable over more than one year, you’ll pay more than the percentage you see. It’s important to know exactly how much you’ll pay back in TOTAL during the full term of the loan you’ve taken out, so make sure you see a full repayment amount and that you’re happy with it before signing on the dotted line.
If you want to get a better idea of how APR will impact your finances over the loan term, try using an APR calculator. This is a simple tool which will tell you exactly how much you’ll pay in extras each year and will give you a good idea of what is being offered to you. Lenders should give you all of the APR information you need and this information should be easy to find, however using an APR calculator can help to clarify things if you’re still unsure, particularly for guarantor loans low apr.
In the UK, APR is treated as a useful tool, helping consumers to make informed decisions about which credit they want to apply for, and is usually provided willingly with complete transparency. In the US and in other parts of the world, APR may be much more confusing and sometimes used to make guarantor loans low apr seem better than they really are. Making sure you take advantage of this information is important, as it could help you to pay much less for your credit than you otherwise may have.