Why One Needs To Determine The APR Rates Before Taking A Loan
According to statistics and analysts one of the major reason behind the success of most lending institutions as well as different investors is their ability to collect money from compound interests on loans or investments they make and such funds had big influence on the industry. When one is working in the banking industry, or one is interested in cash from a lending institution they are likely to come up against a commonly used term, APR, which is the abbreviated form of annual percentage rate but most individuals do not know how to come up with the figures. There is a reported increase in number of individuals seeking credit from lending institutions where most are seeking to acquire homes or cars. Credit cards are also common where financial institutions are offering them at different interest rates and one need to understand their differences which is only possible when one understand how to calculate the interest using the APR calculator. Annual percentage rate is defined as the amount of interest that one has to pay annually to a lending institution depending on the outstanding balance.
The two most common types of interests charged by the lending institutions are variable and fixed interests though some institutions have other rates. If according to the loan agreement the borrower is paying the loan in a fixed interest rate, they pay the same amount in every installment throughout the repayment period but if the borrower and the lender agreed to variable interest rates the value of installments may either increase or decrease during the repayment period. One needs to be keen on signing any loan agreement and discuss all areas affecting the amount they pay to the lending institution as interest. The borrower ought to be provided with key figures an facts about their loans by the lender which allows them to make informed decisions. One should look to discuss the additional cost resulting from the loan such as payment protection insurance fees though to some institutions the fee is optional. It is also advisable that a client inquires about the loan repayment period length as well as the mode of payment. Banks offering lending services are regulated by instituted policies which seek to protect clients from exploitation by the banks.
APR resulting from a compounded interest on a loan is calculated by multiplying the APR with the outstanding balance amount and dividing by 12 when one is interested in interests charged on monthly basis. For an instance of a bank with 12 percent rates, multiplying the rates with the balance, one gets 120 which when divided with 12, one gets 10 shillings which were paid as interest in the given month.Finding Ways To Keep Up With Resources