But what lies behind the inaccessible abbreviation APR? The APRC is the annual percentage rate of charge for the loan. It is an indicator that allows the consumer to assess the advantage or disadvantage of the loan granted. The calculation of this indicator is a true mathematical delicacy. For us, however, it is not important how the APR is calculated, but what this number serves.
The APRC is a really useful thing for us consumers
It allows us to objectively compare individual loans and choose the best one. Unlike the interest rate, the APRC includes all the fees associated with the loan, so it shows us the real price of the loan. What are the fees? There can be many of them – for example:
- application fees
- contract fees
- credit management fees
- account maintenance fees
- insurance of repayment ability and more.
All these items can be in the sum of hundred crowns and thousands of crowns per month. Therefore, it is so important to monitor not only interest, but also APR. In general, the lower the APRC, the better the credit.
Many providers are attracted to favorable interest rates, but do not indicate what fees they charge for the loan. In practice, it looks like the APR value is crumpled somewhere at the end of the text in fine print. And some companies don’t mention it at all! Here it is good to know that anyone who offers consumer credit is legally obliged to always mention APRC. The only exception is loans below USD 5,000 or above USD 1.88 million.
It is possible that the provider is pulling your nose at low interest rates
If the APR provider’s offer is missing or ambiguous (eg APR from…), beware. It is possible that the provider is pulling your nose at low interest rates, while the cost of managing the loan itself is several times more expensive.
It is unnecessary to fly fraudsters or usurers, as there are many solid firms and products on the non-banking market today. For example, try the Mortgage Loan Calculator ! You can easily calculate your repayments, APR and interest, and then easily compare your calculations with other offers.