If you want to make a huge purchase, but want to keep your budget safe, you must have been planned to take a loan.
That is why you must be interested in all rules according to which interest rates are calculated.
Credit Card
If the best choice for you to afford a big purchase is to apply for a credit card, you should better learn about the annual percentage rate (APR) of your card. APR is the fee you will be charged each month.
However some financial specialists use a daily periodic rate (DPR) to set a regular payment according your credit card.
You can also make an easy calculation of DPR by your own. According to the simple formula annual periodic rate on your credit card must be divided by 365.
The other factors that are important when your regular monetary charge is calculated are average daily balance and the quantity of days in your billing cycle. You must pay the regular monetary charge for carrying a balance on a credit card monthly.
If you were offered a credit with a zero interest rate for some month you can easily afford a big purchase. You might be just charged a fee for balance transfer of 4 or 5%. If you plan your budget carefully and repay the whole amount before the determined date, you can benefit with a credit card.
House Loan
The other possible option is to take a mortgage, in such case you should control the APR of a loan. Besides the interest rate it contains additional fee. You can easily find this information about the total payment you will have to make in any advertisement according to the loan.
There are different additional fees you will probable pay, such as an origination fee and mortgage insurance. You can choose by yourself how to make payments. They can also be added into your house loan.
So you should better understand how fees are calculated and what money you will spend on covering all fees.
Auto Loan
The formula for calculation auto loan is the simplest one. The interest rate is applicable to the principle amount that you have borrowed. So if you can cover your payment earlier it will stay to repay less eventually.
If you manage to make regular repayment on time, you can make a good credit history that will obviously be considered during approval of your application for a loan. So the most important thing you should take into consideration is that your ability to pay the necessary amount on time and make sure that this amount does not hurt your budget. There is one way to get easy loans online with no credit history check. However this service provides only small amount of money that will help you to solve everyday problems or some unpredictable monetary emergencies. That is why if you want to take a really big credit you should control your credit score. It influences not only the possibility to apply for a loan, but also the interest rate that you will be offered. So it is completely up to you to make it higher.