APR stands for Annual Percentage Rate which refers to the cost of a mortgage and also includes the interest rate, closing costs, and other fees. While interest rates on loans and APR may seem similar things, both differ in their intensity. Interest rates charged on loans are only a certain percentage specified by the bank in regular terms for borrowing loans while APR also includes other fees which form part of the loan lending process. In this article, we will discuss certain concerns related to how APR and Loans work together.
APR On A Personal Loan
APR on a personal loan is certain charges which are added by the bank to the interest rates of the loan. These charges may or may not include the upfront fees charged by the bank also known as origination fees which can be anywhere between 2 to 5 per cent. While searching for personal loans, you may consider comparing their interest rates, their total span, fees, and APR. This comparison will help you make a better choice since the loans that yield higher APR will also serve you more costs in their span, similarly, loans offering a lower life span will cost lower regardless of their monthly payments. Further if you by any chance are looking for loans for bad credit score, your chances of seeking good APR will also fall.
Tips To Get Good APR On Personal Loan
To get a good APR on personal loans you must have a good credit score, a clean employment history, monthly income, credit report etc. All lenders will take into account the same things before lending you a loan offer. Usually, the deciding factor is the credit score of the applicant. Those looking for loans with bad credit scores may have to struggle more than those with better scores since they will be ruled out from the list. However, there are certain tips that you can follow to get a good APR on a personal loan:
Review your credit reports to ensure their accuracy. You can also submit them to National Credit Bureau in case of any correction.
Make sure to work on improving your credit score. You can do that by:
- Paying your bills on time: Missing even just one payment can negatively affect your score.
- Make sure to have no debts left: When you exceed our credit card borrowing limit and such balances are reflected in your account as unpaid you can succumb to affecting your credit score badly.
- Avoid seeking credits regularly: Applying for credits too often can also be reflected in your account. Since missing even one payment on time can degrade your score, you should keep it secure and play safe.
APR can affect your loan lending and returning process. Being wise with your credit score and doing a little comparison before seeking personal loans will serve to be on your side later.