Annual Percentage Rate (Apr)
| Annual Percentage Rate (APR) is the amount of interest a borrower is obliged to pay yearly. The APR is calculated by multiplying the periodic rate by the number of periods in one year. For example, if a borrower has a periodic rate of 1% and they have a loan with a term of 10 years, their APR would be 10%. This means that the borrower would have to pay $10 in interest for every $100 that they borrowed. The APR is important because it allows borrowers to compare the cost of different loans. For example, a loan with a lower APR will typically be cheaper than a loan with a higher APR, all else being equal. There are a few things to keep in mind when considering the APR of a loan. First, the APR includes not just the interest rate, but also any fees that are charged by the lender. This is why the APR is always higher than the interest rate. Second, the APR is a good way to compare loans, but it’s not the only factor to consider. You also need to look at the terms of the loan, the amount you’re borrowing, and your own personal financial situation. If you’re considering taking out a loan, make sure to compare the APR of different loans before making a decision. This will help you make sure you’re getting the best deal possible. |
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