Understanding the Difference can Save You Money
APR vs. Interest Rate: What’s the difference?
This post aims to educate you on Interest Rates and APR, their differences, and how they are calculated.
APR is another prevalent term in financing, yet many people don’t understand its meaning.
Interest rate is a general term in loans and lines of credit.
The nominal interest rate, or advertised rate, refers to the percentage you must pay for a specific period to borrow money from a lender.
Variable vs. Fixed Interest Rate
Interest rates can be either fixed or variable.
regardless of whether external factors that generally influence interest rates change.
A fixed interest rate will never change,
If the index rate changes, so does your interest rate.
A variable interest rate, on the other hand, can vary during your loan lifetime.
The Annual Percentage Rate, or APR, includes the interest rate of the loan and all other costs involved in it,
such as fees, closing costs, discount points, etc.
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