Category Archives: Loans

What Does APR Mean For Cars?

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By David

Though most of us are familiar with what APR is from using credit cards, many of you may still be wondering “what does APR mean for cars?” To answer this question, we will take a look at exactly what APR is and how it will affect your next car loan.

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APR

If you are unfamiliar with APR, we must first get you up to speed before we can answer the question “what does APR mean for cars?” APR is an abbreviation for Annual Percentage Rate and as the name suggests it is the percent rate that you will pay on a loan each year. This term is used interchangeably with interest rate, so do not be confused by the different terms.

How it is determined

The next thing to know when pursuing an answer to the question “what does APR mean for cars?” is how your APR is determined when you apply for a car loan. This is typically based on a few different factors

1)      Credit Score – the most influential criteria is going to be your credit score. The higher your score is, the more likely that you will be able to get a loan with a lower APR

2)      Type of Car – the type of car you are getting (either new or used) will also affect your APR for the loan. Getting a loan for a new car will typically result in a lower APR than getting a loan for a used car assuming you are borrowing the same amount.

3)      Amount & Duration – The amount you are borrowing and the length of time you are borrowing it for will have a big impact on your APR. The more you borrow and for longer, the higher your APR will typically be.

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How it is calculated

Now that you know what your APR is and how loan issuers go about figuring out the appropriate rate for each individual, we can take a look at how your APR will be used to add interest to your loan. With a typical car loan, your interest will be applied once a year at the start of the year on the remaining balance of your loan and then divided up into twelve equal segments that you will pay with your principle each month. For example, let’s say you got a car loan for $30,000 that you intended to pay off in 36 months with an APR of 2%. Your first year monthly payments would be calculated by multiplying the outstanding balance of your loan, $30,000 in this case by your APR, which is 2% for this example. The equation will look like this: 30,000*0.02=600 and as you can see this yields a result of $600. Now divide this result by twelve: 600/12=50. Next divide your principle by the total number of months remaining on your loan which will look like this: 30,000/36=833.33. Finally add your two results together: 833.33+50=883.33 yielding a monthly payment of $883.33 for the first year.

Now that you know how APR works for cars, you are ready to start shopping for your perfect ride.

Need a credit card? Review 0% APR offers from top lenders.

What Does Finance Rate APR Mean

By David

If you have been trying to get a loan or credit card, you have probably wondered what does finance rate APR mean? In order to answer that question, we will take a look at what it is and what it does in terms of your loan.

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What is APR?

APR stands for Annual Percentage Rate and understanding it is absolutely vital for answering the question “what does finance rate APR mean?” As you have probably assumed from the name, your APR is the percent rate that you will pay on your loan each year and will play a large part in determining how much you will end up paying back on your loan each month. It is also important to note that your “finance rate” and your “APR” are essentially the same thing so do not allow the different terminology to confuse you.

How is APR determined?

Your APR is determined by a few different factors that will be considered together to determine your rate and help you answer the question “what does finance rate APR mean?”

1)      Credit score – Your credit score is going to play the largest role in determining your APR on your loan. The more credit worthy you are, the higher your score will be, and thus the lower the APR on your loan will be.

2)      How much you are borrowing – The amount you are borrowing will also have a decided impact on your loan. The greater the amount, the higher the risk for the lender and thus the greater the APR.

3)      How long you are borrowing it for – The length of time you are borrowing the money for also has an effect on your APR. The longer you intend to borrow for, the higher the risks to the lender and thus the higher your APR

4)      Special circumstances – Sometimes, other factors will influence your APR like where you live, special offers from the lender, or in the case of a car loan the type of car being purchased. These will vary from situation to situation and have different effects on what your APR will be.

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How is APR calculated?

Since most loans are going to be for more than a single year, your APR will be applied to only one year at a time and will use the balance remaining to be repaid at the start of the year as the amount to determine your interest from. For example, if you got a home loan for $50,000 that you intended to pay off over 10 years with an APR of 5% the interest on the first year would be a total of 50,000*0.05=2,500 or $2,500 for the whole year. This of course would be split up equally over the 12 months of the year and paid along with a chunk of the principle each month. If you wanted to figure out your interest for the second year, you would do the same thing, but with the second years’ starting balance.

Now you know what APR is and how it will affect your next loan.

Click here to compare 0% APR credit card offers. Compare and find an offer that is best for you.

What Does APR Mean For Loans

By David

APR (annual percentage rate) seems simple enough. You borrow “x” amount of money and you pay “y” interest on that money. However, it is never that simple and answering the question “what does APR mean for loans?” is no exception to the rule.

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APR

Before we can get down to answering the question “what does APR mean for loans?” we first need to take a look at what APR is. As you are likely aware, APR stands for Annual Percentage Rate, and as it implies, this is the amount of interest that you will have to pay on your loan each year it is being borrowed for. APR is typically a pretty good metric for comparing one loan to another, however there are other considerations that should also be taken into account.

How it is calculated

Now that we know what APR is we can take our next step in answer the question “what does APR mean for loans?” by taking a look at how it is typically calculated. In the average loan you will be making payments on a monthly basis. This means your APR will typically be divided by 12 (the number of months in the year) and assessed with your payment each month. So let’s take a look at how that would be calculated. Let’s say you got a loan for $100,000 with an APR of 5% that you were going to pay off in 10 years, we would first need to find out how much interest we would be paying for the first year of our loan, so we multiply our interest rate by the amount borrowed. The equation will look like this: 0.05*100,000 = 5,000. We then take this result and divide it by 12 (the number of months we will be paying on the loan this year) to find out how much interest we will be paying each month. That equation will look like this 5,000/12 = 416.67. This means each month we will pay $416.67 in interest. Now to find the principle we will pay each month, we need to divide the borrowed amount by the number of months in the full term of the loan. The equation will look like this: 100,000/120 = 833.33. Finally, we add our principle and interest together and get the monthly payment. The final equation will look like this: 833.33 + 416.67 = 1,250 or $1,250 each month. To find your payments for subsequent years follow the same procedure, but replace the total borrowed amount with the remaining unpaid amount in each instance.

Other considerations

When shopping around for the right loan, even though APR is a good measuring stick for comparisons, it is not the only thing that should be considered. Often, there are other fees and expenses associated with the loan application process that should be factored in before choosing which loan to go with. These fees will tend to vary from business to business so be sure to keep an eye out for them.

With the information above, you should be able to make an informed decision about what loan is right for you.

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What Does APR Mean When Buying A Car?

By David

APR (annual percentage rate) is something we are all familiar with already from our everyday credit card usage. But what does APR mean when buying a car? The short answer is, exactly the same thing. However how it is all calculated, and what it can mean for your car payments is a bit different.

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How APR is determined

The APR on your car loan will be determined by a few different factors. The higher this number the more you will ultimately end up paying for your new car.

1)      Credit Score – The key determining factor for your car loan is going to be your credit score. The higher your credit score is the lower the APR will be on your car loan.

2)      Amount of Loan – As the amount of the loan increases so does the amount of work involved for the lender and the risk of default, thus increasing the APR to compensate

3)      Length of Loan – Like the amount, the longer the loan is for, the more work and risk is being taken on by the lender and thus the higher the borrower’s APR will be.

4)      Type of Car – The APR for a new car loan is typically a little lower than for that of a used car.

5)      Location – Sometimes where you are buying the car from has an impact on the APR that could be either positive or negative.

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How Payments Are Calculated

Your monthly payments are a combination of factors including how much was borrowed, how long it was borrowed for, and what your APR was. These factors interact to determine how much principle you will pay each month and how much interest.

Putting it all Together

So let us say that you decided to get a $25,000 new car from a local dealership. There are taxes and fees associated with this, but to avoid taking out more loan money you decided to pay these out of pocket meaning the loan is for just the $25,000. This amount is your principle.

After discussing options, you decide that a 60-month repayment plan is best for you. Since you have really good credit they go with and APR of just 5%. To figure your monthly payments for the first year you’ll multiply your APR with your principle (25,000*0.05=1,250) and then divide the results by 12 (the number of months in the year) (1,250/12=104.17). Now you will take your principle and divide it by the number of months you will be paying on the loan (25,000/60=416.67). Finally add your two results to determine your first year’s monthly payments (416.67+104.17=520.84).

Obviously the shorter the term of your loan the more you will pay each month, but the less you will end up paying in interest and vice versa.

Now, with the above information at your disposal you can be certain you are ready to start looking for that new car and using the calculations above or one of the calculators online, you can find a reasonable payment and avoid a surprise at the dealership.

DontSpendMore.com is a free site that allows consumers to save hundreds of dollars every month.

We hope you liked our article what does APR mean when buying a car? Let us know in the comments below.

Loan Fraud: Three Tips To Protect Yourself

By Dr. Kavita

A loan is something that comes as a much needed assistance or relief from a messy financial situation. That is exactly why we all apply for loans, isn’t it? But imagine for a moment that this loan which was supposed to be the answer to your burning problem suddenly becomes more painful and troublesome than your original difficulty.

The loan which was looked forward to as a respite from financial difficulty is now an attempt by a fraudster to deprive you of your hard earned money. Harsh, but true. It happens every single day. Just visit FTC (Federal Trade Commission’s) website and you will see all the latest scams laid out for you.

Click here to compare multiple offers and save hundreds of dollars every month. Credit cards, loans, cell phones, and more at DontSpendMore.com.

How do loan frauds happen?

The scam typically begins with a phony lender approaching you with his/her loan offer right in your inbox. These scammers frequently mention the familiar name of a genuine lender to get customers in.  After all, if they reveal that they are affiliated with a business that you recognize to be legitimate, they must also be authentic, isn’t it? Not at all!

Their e-mail may also mention an address that you need to reply to. There are also details of a third party consultant who will initiate the loan application process, in case you are interested. If you believe this trick and respond back to the address/phone number given in the mail, you will be asked to share your sensitive info like date of birth and social security number. Then after a short duration of interactions, your loan suddenly gets a magical approval.

To cut a long story short, you will be made to believe that your loan is fully approved and all that you need to do is to wire an advanced payment to the scammer. If you continue to be naïve even at this point, you will in all probability send the money and once you do this, all that you will get is a bank account that is much lighter and a scammer who has fled with all your sensitive information.

Don’t be surprised to read this, because it is possible and there are so many unfortunate people out there who have been actually scammed by loan fraud. As the popular adage says, ‘Better safe than sorry’, so here are three tips to protect you from having to go through the pain and loss of loan fraud.

Do not trust any loan offer that comes unasked

The common trait with all the loan fraudsters is that they will always initiate the first conversation. You will find a loan offer even when you never asked for it. Heed this warning and simply refuse to respond to these emails, no matter how awesome the loan offer is.

Do not deal through mediators

If the loan offer is actually from the reputable company that you think the e-mail is from, do you think that they need a mediator? Just read the email, but avoid clicking on any links in the mail, no matter how legitimate they look. Use the Internet to search for the company’s site and check their loan offers directly.

Never share your sensitive info

Unless you have dealt with the company directly via their support center, do not ever share your financial and other important personal information, such as social security number and so on.

As a final note, it always helps to heed to your intuition, because when something appears too good to be true, it usually is not. Be safe. Don’t fall prey to unscrupulous loan fraud schemes.

Click here to compare multiple offers and save hundreds of dollars every month. Credit cards, loans, cell phones, and more at DontSpendMore.com.

Creepy Credit Report Errors Could Cost You Dearly

Credit reports are not perfect. From reporting jobs you never had to delinquencies you never caused, serious errors could inadvertently creep into your credit report and literally wreak havoc with your personal, professional, and financial life. Millions of individuals are denied credit every year, primarily due to credit related issues. The good news is that a significant percentage of these denials could be easily mitigated by reviewing and correcting credit report errors.

We have prepared some preliminary tips to help you obtain your credit report and also dispute inconsistencies and errors that don’t belong there.

Credit reports, a primer

For those who have never reviewed one, a credit report is a basic fact sheet containing critical information about your transaction history, employment data, address, and personal financial information that is reported to the three major credit bureaus. The report is made available to a wide range of parties, including financial institutions, lenders, employers, and other parties who may want to review your credit history. While there are many versions of your credit report, three major credit bureaus compile and sell this information: Experian, Transunion, and Equifax.

Every time you make a payment (or not), initiate a transaction, receive a new credit line increase — all of that information is organized, documented, and recorded with the major credit bureaus.

The law is on your side

According to The Federal Trade Commission, “The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation’s credit reporting companies.” Under the FCRA, you are entitled to one free credit report every year from all the major bureaus. You can download your report at annualcreditreport.com. FREE!

It is absolutely imperative that you take advantage of the free credit report every year. Not only does it offer you the opportunity to spot and correct factual errors, you can also monitor your report to determine if you have been a victim of identity theft. Why would you want to enrich unscrupulous credit thieves at the cost of your hard-earned credit?

What if you have been a victim of credit report errors?

Even a small error on your credit report could spike interest rates, lead to credit denials, ruin your chances of homeownership, and jeopardize some (though not all) employment opportunities. After reviewing your credit report, if you feel that there is an error in the reporting, please don’t let it pass. Take immediate remedial action.

First, send a dispute letter (for a sample dispute letter visit ftc.gov) to the credit reporting agency and creditor/information provider. Provide copies of supporting documentation and mail your documentation using Certified Mail With Return Receipt.

The agency will initiate an internal investigation and also involve the information provider if necessary.

Generally, the credit reporting agency will review your information and respond within thirty days if your claim has merit. If corrections are initiated, you can ask the agency to send a revised and corrected report to any organization that received the incorrect report.

It is always a good idea to regularly monitor your report and identify and mitigate credit report errors.