 |
 |
 |
| |
| |
Finding the
best loan
Aug 23, 2004
When looking for a loan, be it a long term one such as a home
mortgage, or a short-term payday loan, finding the best available
deal requires that you know a little about what you are looking
at, and how to compare the loans on offer to you.
All lenders are required by the Federal Truth in Lending law
to quote the cost of the loan as an APR (annual percentage rate),
this is the cost expressed as a yearly rate. The figure given
is the cost of the loan to the borrower in relation to the amount
being borrowed, which is why it is quoted as a percentage.
The formula used to calculate the APR is quite complex, but
thankfully you will not need to work this out yourself as the
lender is required to provide it to you by law. The APR should
allow you to compare ‘like for like’ the loans on
offer, as this rate should include all of the charges and fees
applicable, so if one loan has an APR of 5% and another is 4%
then the four percent loan will cost you less.
However, you do need to be wary when comparing APRs –
while there are laws in place governing how these are calculated,
they can vary from state to state, and the laws are open to
slightly different interpretations of what is included so be
sure to check with the lender that the APR you are quoted includes
every single cost so as you can be sure that it is accurate.
|
|
|
 |
|
 |
|