Yusra3
VIP Contributor
When shopping for a personal loan, one of the most important numbers to understand is the annual percentage rate (APR). The APR represents the true yearly cost of borrowing once all fees and interest are calculated into the total repayment amount.
Most personal loan lenders advertise interest rates, but the APR gives you a more accurate picture by including any upfront origination fees. A loan's APR is typically higher than its stated interest rate once those fees are factored into the calculation.
For example, a $10,000 personal loan with a 10% interest rate and a 3% origination fee might have an APR around 11.3% after the $300 fee cost is spread out over the life of the loan.
APRs can vary significantly between lenders and based on your credit qualifications. Having a good to excellent credit score is crucial for securing personal loans with the lowest possible APRs and saving money over the repayment term.
Whenever comparing loan offers, pay close attention to the APRs rather than just the interest rates alone. The APR is ultimately what you'll be paying annually on the borrowed capital.
Most personal loan lenders advertise interest rates, but the APR gives you a more accurate picture by including any upfront origination fees. A loan's APR is typically higher than its stated interest rate once those fees are factored into the calculation.
For example, a $10,000 personal loan with a 10% interest rate and a 3% origination fee might have an APR around 11.3% after the $300 fee cost is spread out over the life of the loan.
APRs can vary significantly between lenders and based on your credit qualifications. Having a good to excellent credit score is crucial for securing personal loans with the lowest possible APRs and saving money over the repayment term.
Whenever comparing loan offers, pay close attention to the APRs rather than just the interest rates alone. The APR is ultimately what you'll be paying annually on the borrowed capital.
