When you are shopping for a loan, instead of looking at the interest rate, you should focus on APR, which provides a clearer picture of how much the loan will cost you. An interest rate is the percentage of a loan amount that it costs to borrow money.
It’s time for another mortgage match-up: "Mortgage rate vs. APR." If you’re shopping for real estate or looking to refinance, and you’ve seen a certain mortgage rate advertised, you may have noticed a second, similar percentage adjacent to or below that interest rate, possibly in smaller, fine print.
When shopping for a mortgage, knowing the difference between a mortgage rate and an APR can help you pick the best loan for your situation. You’ll also want pay attention to other costs of the loan that aren’t included in the APR.
The difference Between APR and Interest Rate is simple. APR is the true cost of the loan, while the interest rate is just the amount of interest you’ll pay.
Interest rate refers to the annual cost of a loan to a borrower and is expressed as a percentage; APR is the annual cost of a loan to a borrower – including fees. Like an interest rate, the APR is expressed as a percentage.
APR versus interest rate: What’s the difference? If you’re applying for a mortgage, these are two financial terms you need to understand. APR stands for "annual percentage rate," or the amount of.
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APR and interest rate are more closely related than either is with factor rate, so we’ll discuss those two first before describing how a factor rate might come into play. What is an APR vs. interest rate? The interest rate is the annual cost of a loan to a borrower expressed as a percentage of the principal loan amount. Easy enough so far.
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But also consider the interest rate and the APR to get the whole picture. If the lender charges fees but has a much lower interest rate and APR than you can get elsewhere, it may be worth it for you to pay the fees to get a lower rate. Shop around for the best interest rates and APR. Consider online lenders and brick and mortar lenders.