Loans and Credit Cards-Tips to Help Lower Your APR
One thing that many have not come to appreciate as yet I the fact that APR is indeed costing them money and lots of it for a fact. As such, if you look forward to unlocking the doors to financial freedom, one thing that you need to look into is your APR. Actually where you happen to have so lowered your APR, the benefits to your financial health and life is in the fact that you get to pay less for your 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. For instance, take a case where you look at a slight variation in your percentages for loan rates, as little as 0.25% in an instrument such as a mortgage that would add up to $4000 and over in the entire life span of the LittleLoans.
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.
So what is APR in the first place? 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%. Where such as is the case, you will realize that for the 12 month period that the loan will be extended and spread over, you will be paying $80 in interest for every $1000 borrowed. 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. See the following underlined factors that actually do get to determine your APR.
The first step that needs to be taken when it comes to the need to lower APR is to know what they are that actually determine the index. Whenever you will be making an approach to a bank or any other lender for a loan, some of the things that they will often look into as they review your application are the two basic ones; your ability to pay the loan as agreed and your creditworthiness. Looking at the two, the one that will come into play majorly when it comes to establishing your APR is your credit score. 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.