When you apply for credit, there’s a lot to consider — including the annual percentage rate of your loan, often abbreviated to APR.
Think of the APR as the price that comes with borrowing money, including fees and interest. While APR is often treated as another way to express a loan’s interest rate, the two terms have different meanings.
THE DIFFERENCE BETWEEN APR AND INTEREST
If you’re used to borrowing money on credit cards, APR and interest rates are typically the same. However, this isn’t the same for car loans. While an interest rate is a percentage of the principal that you pay to borrow money, the APR gives you a bigger picture. The APR includes both required fees and interest costs. Your loan’s APR may include transaction fees and loan origination fees. However, it won’t cover avoidable costs, like late payment fees. Speak to an expert in our finance department to learn more about what’s included in your APR.
TYPES OF APR
You may encounter two types of APR: fixed and variable. With a fixed APR, you’ll enjoy a constant rate throughout the life of the loan. If you like to plan ahead and budget, choose a fixed APR. A variable APR, on the other hand, can rise or fall throughout the life of the loan. While this could result in savings, you could also end up spending more than you expect.
GETTING A GOOD APR
When you take out a loan, it’s a good idea to be aware of both the APR and the interest rate. To determine your APR, lenders consider your credit score. Don’t know your credit score? No problem! We provide a free credit score estimator tool. And even if your credit score is less than perfect, we can offer you affordable financing at Quirk Chevrolet Of Bangor.
You can even speed up the buying process by applying online. For great deals on great vehicles, come to Quirk Chevrolet Of Bangor.