but what is the difference between the Interest Rate and APR? The Interest Rate is the actual rate you will pay on your loan, while the APR is in place to offer as much information as possible about.
It does not reflect fees or any other charges you may have to pay for the loan. An annual percentage rate (APR) is a broader measure of the cost to you of borrowing money, also expressed as a percentage rate. In general, the APR reflects not only the interest rate but also any points, mortgage broker fees, and other charges that you pay to get the loan.
If you want to know the total cost of the mortgage loan you should compare the apr rates quoted to you. The best APR may not be the best rate or lowest payment but it will be the cheapest over the life of the loan. APR vs Interest Rate Comparison Chart. The difference Between APR and Interest Rate is simple. APR is the true cost of the loan, while the interest rate is just the amount of interest you’ll pay.
An APR is also a percentage, but it also includes all the costs of financing, including the fees and charges that you have to pay to get the loan. The APR for a given loan is typically higher than the mortgage interest rate. An APR is never used to calculate your monthly payment. Understanding mortgage interest rates
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APR helps to standardize how interest rates are compared, so that a 10% loan is not made to look cheaper by calling it a loan at "9.1% annually in advance". The APR does not necessarily convey the total amount of interest paid over the course of a year: if one pays part of the interest prior to the end of the year, the total amount of interest paid is less.
It pays to understand interest rate vs. APR When you’re shopping for a personal loan , always read loan documents, ask questions about additional fees and do the math. Interest rate is one way to determine your loan’s cost and monthly payment, while APR can give you valuable insight into how much you’ll be paying in fees plus interest over the term of your loan.