Whether you’re applying for a mortgage, a credit card, or an installment loan, you will come across the term annual percentage rate. But what is an annual percentage rate? Also known by the abbreviation APR, an annual percentage rate describes the interest rate for the entire year as opposed to a monthly rate, and it includes fees charged for the loan. If you’re interested in pursuing a payday loan or installment loan, you will need to factor in the APR when calculating how much the loan will cost.
What Is an Annual Percentage Rate?
How does an APR differ from an interest rate?
An APR is the cost of your credit expressed as a yearly rate. It provides the consumer with a single value, which they can use to compare the cost of credit between one lender and another. An interest rate, on the other hand, is the cost of borrowing money (generally a percentage of the amount owed). Although they are similar, these rates apply to different time periods and one contains fees (APR) while the other does not (interest rate).
Do all lenders provide an APR?
Yes. In fact, the Truth in Lending Act requires lenders to disclose their APR. All lenders are held to the same standards to ensure that the rate is accurate and so borrowers can use APRs to confidently compare their options. All APRs must include certain non-interest charges and fees, and they must be calculated in detail.
How is an APR calculated?
Quite simply, the lender’s fees (any fees required to finance the loan) are incorporated into the interest rate to form the APR. To do this, the fees are spread out across the life of the loan as if they were additional payments, and the rate is recalculated.
What should I look for in an APR?
Annual percentage rates play an important role in the process of determining a loan’s total cost. Because they include extra fees associated with the loan, you won’t have to scour websites looking for all the applicable interest rates, fees, and charges. As you compare APRs, you will obviously want to look for an affordable rate. In addition, be sure to study the lenders’ payment schedules to determine what you will actually be paying for your loan amount. Sometimes borrowers only look at the interest rate, and they’re surprised to learn what they will actually be paying.
Where can I find Advance Paycheck Online’s annual percentage rates?
We offer installment loans to residents of Illinois, Utah and Wisconsin, and our APRs vary by state. To learn more about our fees schedule and APRs, check out the Loan Costs and Terms page for your state:
Finally, if you’re looking for an installment loan from a direct lender, check out Advance Paycheck Online. Our flexible payment schedules will help you pay off your loan as soon as possible, and we prorate the fees involved so that if you pay off the loan early, you will have very few fees to pay. To get started, please contact us online or give us a call at 1-815-436-4242. We would be happy to help!