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What does the term annual percentage rate mean for a loan?
APR Annual percentage rate, commonly referred to as APR, is what creditors charge consumers in order to allow them to make installment payments on rather large purchases, such as cars and homes. Loan types, credit score, report, and history, can all have effects on what APR you can get for a loan. APR is NOT the interest rate! The annual percentage rate (APR) is an interest rate that is different from the note rate. It is commonly used to compare loan programs from different lenders. The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. Typically the APR is found next to the note rate. APR does NOT affect your monthly payments. Your monthly payments are a function of the interest rate and the length of the loan. APR is a very confusing number! Even mortgage bankers and brokers admit it is confusing. The APR is designed to measure the "true cost of a loan." It is supposed to create a level playing field for lender by preventing them from advertising a low rate by hiding fees. Unfortunately, different lenders calculate APRs differently! So a loan with a lower APR does not necessarily translate to a better rate. The following fees ARE generally included in the APR: * Points - both discount points and origination points * Pre-paid interest. The interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations. However, companies may use any number between 1 and 30! * Loan-processing fee * Underwriting fee * Document-preparation fee * Private mortgage-insurance The following fees are SOMETIMES included in the APR: * Loan-application fee * Credit life insurance (insurance that pays off the mortgage in the event of a borrowers death) The following fees are normally NOT included in the APR: * Title or abstract fee * Escrow fee * Attorney fee * Notary fee * Document preparation (charged by the closing agent) * Home-inspection fees * Recording fee * Transfer taxes * Credit report * Appraisal fee Calculating APR on adjustable and balloon loans is even more complex because future rates are unknown. The result is even more confusion about how lenders calculate APR. Do not attempt to compare a 30-year loan with a 15-year loan using their respective APRs. A 15-year loan may have a lower interest rate, but could have a higher APR, since the loan fees are amortized over a shorter period of time. Finally, many lenders do not even know what they include in their APR because they compute it using a software program. It is quite possible that the same lender with the same fees using two different software programs may arrive at two different APR values! Yup - clear as mud.
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Annual percentage vs effective rate The actual interest rate on a mortgage will always be higher than the annual percentage rate unless the borrower keeps the lo…an for the full term. Refinancing or selling before the end of the term results in a much higher actual (effective) interest rate. The effective rate on a mortgage can be lower than the annual percentage rate (fixed rate) by paying extra to principal especially early in the mortgage term.
Q. A applicant accepts an offer of a 25 years fixed rate loan from a lender at an interst rate 6 5%for an amount of $150,000. The lender charges include a loan origination fe…e of $4500 and 2 discount point. How do you calculate the APR ?
The annual percentage rate, or APR, does not measure the true cost of a loan, though does make up an important part of the true cost. The Effective Percentage Rate, or EPR, …measures the TRUE annual cost of a loan by incorporating the following elements into the calculation: * Annual percentage rate * Application fees * Origination fees * Points/cost reduction fees * Other lending closing costs Generally, very low APRs are presented by a number of lenders, however, the fees and/or points that must be paid at closing to obtain those fees may make the loan less attractive (especially for borrowers that don't have a lot of money to spend upfront).
It is 17.99%
If a loan shark floats a loan and charges the usurious rate of 33 percent per month what is the effective annual percentage rate?
you shouldn't bother, because you're not going to be taking loans from a loan shark. go to bank of america, jeez!
Annual percentage yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year
how the annual percentage rate measures the true cost of a loan
Cassandra is repaying an installment loan of 3500 with 20 equal monthly payments of 196 each what is the annual percentage rate of the loan?
What a loan is What interest is And how the annual percentage rate measures the true cost of a loan?
What a loan is: A sum of money lent at interest. What interest is: A charge for a loan, usually a percentage of the amount loaned. And how the annual percentage rate measures …the true cost of a loan? Annual percentage rate, commonly referred to as APR, is what creditors charge consumers in order to allow them to make installment payments on rather large purchases, such as http://wiki.answers.com/Q/What_does_the_term_annual_percentage_rate_mean_for_a_loan and homes. Loan types, credit score, report, and history, can all have effects on what APR you can get for a loan.
The percentage rate for an on-line easy loan is not available until a preliminary application has been completed. Speaking in broad terms, according to the easy loan source, t…he actual percentage rate is determined by the actual lender which is not the easy loan source. Most state have a maximum percentage rate allowed (it is often suggested in very small print that the potential borrower discover this rate himself). This is not needed for residents of Georgia, Ohio, Pennsylvania, North Dakota, Virginia & West Virginia as those states prohibit loans of this nature.
The average annual percentage rate or interest rate on home improvement loans is around 3.99% to 9.49%. Honestly it really depends on your credit profile.
An annual percentage rate is the average percentage change over aperiod of a year. The percentage change is the change divided bythe initial value, expressed as a percentage.
It allows consumers to compare rates across different providers of finance.
The only way that one can change an annual percentage rate on a loan or credit card is to renegotiate the terms of the loan or credit balance with the lender. Another way wou…ld be to simply refinance the balance.
A measure of the cost of credit expressed as a yearly interest rate.