That’s why it’s often referred to as the representative APR. It takes into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of a loan.Īll lenders must calculate the APR of their products in the same way, and must tell you the APR before you sign an agreement, so for consumers it can be a handy tool for comparison.īear in mind, however, that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. This figure is designed to provide an annual summary of the cost of a loan. If you’re comparing any credit-based products, it won’t be long before you’ll come across the Annual Percentage Rate (APR).
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