If you wish to compare car finance in Tweed Heads successfully, you need to understand the impact of interest rates on your car loan. One of the most important metrics in determining which loan is best for you is the annual percentage rate (APR). The APR is a critical metric when it comes to understanding the total cost of a loan over its full life.
To understand how the APR affects your loan and how it impacts comparing car loan options, let’s look at a few factors.
What is the APR?
The APR is a standardised measure that reflects the total cost of borrowing the car over the course of a year, expressed as a percentage of the total loan amount. It incorporates the interest rate charged by the lender, as well as additional fees and costs associated with obtaining the loan.
Understanding the APR means better understanding the total cost of the loan, as the APR is made up of both interest rates and additional costs.
The interest rate is the primary cost of borrowing money, typically expressed as a percentage of the loan amount. Essentially, the interest rate is what the lender charges you for lending you money. This interest rate can be reduced by having a good credit score, a higher income or contributing a larger down payment at the start of the loan.
Added to the interest rate are the fees and additional costs included in setting up the loan. This includes application fees, establishment fees and annual fees. All these costs together amount to the total overall cost of the loan and make up the APR.
Why Does the APR Matter?
The APR is an important metric, as it helps provide you with a more comprehensive and accurate understanding of what your loan actually costs. Often, people only consider the interest rates. However, interest rates alone cannot give you a full picture, as they don’t account for additional fees and charges associated with the loan.
The APR is also useful for comparing loans because different lenders offer variations on the costs associated with the loan. By adding together the interest rate and additional fees, the APR provides a means to make a more informed decision about which loan offer provides you with the best value for money.
At the end of the day, you want to choose a loan option that provides you with the lowest APR possible, as this translates to the best cost of the loan overall.
If you wish to compare car finance in Tweed Heads to find the best possible deal, speak to us at iCREDIT. We can help you determine the APR for different loan options so that you can choose the best one for you.