Generally, People listen the word APR which is using in finance sector. What is APR or what does APR Mean? In simple understanding of APR is the annual percentage rate which is counted as yearly rate. It’s the cost of your loan.
If someone seeking for loan, mortgage, car finance or credit card then definitely he must have seen the word annual percentage rate. So, before going to apply any of them you should have to know the detail understanding of APR and how it will effect on your monthly installment plan.
What does APR Mean?
In simple word, yearly calculation of interest rate is called APR. It is also the added price that borrower pay to lender in a one year of time. The better understanding of annual percentage rate is really important for borrower to make right and well informed credit decisions.
This will gives customer the appropriate indication of how much he will pay against the money that he get from lender. APR is one of key factor that will helps you to decide and compare that which credit product is more compatible with your needs.
How Does it Apply?
Every credit card company has their own financial policies for customers. Generally, credit card companies offer a deal of grace period for their new clients. If someone got a new credit card and make purchases and pay off their balance within the due date then there is no interest applied on that particular money, customer will pay only the same amount that he used on the behalf of the credit card.
If he haven’t pay the balance within the due date then APR will apply on that particular balance and will pay the interest on particular amount that he used.
How APR can Helps to Borrower?
If you are new customer for credit card companies or you will going to get any credit card or you are applying for then keep in mind few tips. May be APR helps you to take a decision that will take you the better offer and promotions offered by credit card companies?
Every credit card company has their own term and conditions for the clients. If credit card holder doesn’t violate the policies and terms of the company then customer can enjoyed the perks and promotions offer by the credit card companies.
In general practice, financial companies can’t change the APR for the first year for their cardholders unless user violated the term and conditions of company. If customer violated the rules then definitely company has the right to change the value of APR for that particular clients.
If consumer has the detail knowledge of APR then he should review the term and conditions that will help to bargain with the company before using the card.
In any case, company changes the term and conditions for any particular consumer then he will be bound to give a notice 45 days ago.
Difference between Annual percentage Rate and Interest Rate
Every consumer should have the knowledge of how to differentiate both of them. Because its look the same but actually they are not. Both have their own calculation of formula and have different meanings depends on what kind of product you apply for.
There will be two types of rates-interest and annual percentage rate. Interest rate is the percentage charged by the lender to the borrower on the actual amount and will be the fix rate unless any violation of terms and conditions from the borrower side.
However, APR is broad term to understand because it has multiple factor such as lender fees, insurance and interest rate. If you are applying for credit card and there are no lender fees added in APR then interest rate and APR are the same.