What should you know about the Annual Percentage Rate (APR)?

If you decide to apply for any kind of lending, you will definitely face many new terms and definitions especially connecting with different rates and fees. The annual percentage rate (APR) is one among those which you must learn very attentively to avoid paying extra money. The APR is the sum of funds, which your lender requests you to pay for borrowing. To put it simply, it is the cost of your lending. That’s why it is important to check and compare a few lenders or credit unions to choose the most profitable variant.
The APR shows you the sum that you will overpay if your credit is for the whole year. So to understand how much you will overpay per day, you have to divide the APR by 365 days. And exactly such way you can calculate the sum of the APR for short-term loans. But don’t forget to pay your attention that some lenders and credit companies divide the sum by 360 days instead of 365 days. That is one more reason why you should do a big researching work before taking a loan, learn all terms and conditions and find a company, which will be the most convenient for you.
Except for the APR, every loan has some definite interest rate as well. So how the interest rate differs from the annual percentage rate? Interest rate means the price of borrowing the exact loan amount. In other words, it is a pure percentage of your lending sum. While the APR includes the interest rate and other fees of banking or credit unions’ service. You should notice that your credit score has an influence on the interest rate as well – if your score is high, you will get a low rate.