If you have a loan or a credit card (or even a number of them), you should be aware of the APR. The APR, or the Annual Percentage Rate, allows you to calculate the cost of your loan, allowing you to determine just how much money you’ll pay each year for your debt. If you are looking to compare loans or credit cards, comparing the relative APRs will be the best starting point. There is obviously a bit more to choosing a loan or credit card than just opting for the one with the lowest level of APR but equally, you’ll find that choosing a lower APR is a good starting point in finding the option that best meets your needs.
If you need further advice or guidance on why this is the case, the following three benefits are major reasons in why finding a lower APR is going to be of benefit to you.
It will take less Money to pay off your Debt
With a lower rate of APR, the cost of the loan or the credit card comes down and this means you will require less money to pay off your debt. This has to be one of the most important aspects to consider when looking for a loan or credit card, because you want to have as much money for yourself and your own activities.
The more money you have to spend each month or year paying off debt or servicing a loan is less money for you. You shouldn’t need to be told that this is a state of affairs that you will want to avoid so make sure that you find an APR that is suitable to your needs and which allows you to work towards your main goal of being debt free without spending too much money.
You should be able to pay off your debt at a Faster Rate
Another very good reason to choose a loan or credit card with a lower APR is the fact that you should be able to pay off the debt at a faster rate. This all depends on your ability to treat the debt in the correct manner but if you make regular payments and don’t abuse the debt, you’ll find that a lower rate of APR assists you in being debt free faster.
This is because a lower rate of APR uses less of your money to pay for interest and more of your money to actually pay off your debt. It is servicing the interest that causes a lot of people problems when it comes to getting out of debt and with a lower level of APR; it is possible to get out of debt quicker.
You should have a lower minimum Payment each Month
Something that a lot of people overlook, but which is important in dealing with their finances, is the minimum amount of money that they have to pay each month on their credit card. You should be looking to pay off as much as you can each month but it may be that on occasions, you need to minimise the amount of money that you pay off towards your debt. Your APR will allow you to figure out the minimum amount you need to pay on a monthly basis and a lower APR relates to a lower minimum payment each month. If you are looking to provide yourself with some flexibility, you’ll find that a lower APR is of benefit.
When it comes to taking control of your finances, you should be looking to review your debts and work out the best way to service these debts. This is why it is important to consider the associated APR with all loans and credit cards in your name.
If you are looking for a loan with an affordable rate of APR, you should find that a guarantor loan is of benefit. It is the credit history and rating of the guarantor that matters to the lender, not the applicants, and this means that the eventual borrower will be able to obtain a lower rate of APR than if they applied themselves.
This is definitely a positive outcome and one that will help you move towards being debt free at a faster and more efficient rate.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.