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. With a lowered APR, you will be in such a position where you will pay much less for 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 even looking at the fact that with just a percentage variance as little as 0.25% on an instrument such as a mortgage would sum 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.
To begin with, let’s get some of the basics of APR, know what it is in preciseness. Basically, APR is the annual percentage rate and this is an indicator of how much you will be paying in costs for you to borrow money for a year. Putting figures into it, take for instance a case where you would be going for a personal loan worth $10000 and the APR is 8%. In such a case, you realize that you will be paying $80 for every $1000 borrowed for the 12 month period. Summing all this up in the period of the 12 months, you will have paid a total of 0 in interest for the $10000 loan. The following is a quick rundown on some of the factors that get to determine your 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 the event that you approach a bank or some other lender for a loan, some of the things that they will take a look at are your creditworthiness and your ability to repay the loan. The credit score you have happen to be the major factor that determines your APR. 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.