If you've seen ads on television for lending companies, you've probably heard companies boasting that they have low APR financing. You may have wondered what APR financing is, why low APR financing is attractive, and what it means for your loan. Anytime you become heavily financially invested in something, it's a good idea to be familiar with all of the terms and conditions that might arise.
APR stands for "annual percentage rate," the amount of money that you'll be charged for borrowing money. Banks and other lending organizations make their profits by charging a fee for the use of their money, and the annual percentage rate defines how much you're being charged for your loan, and is taken over the course of an entire year, rather than month by month. The APR is always expressed as a percentage.
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The main benefit of APR is that it allows you a way to compare multiple lending groups when considering taking out a loan or credit card. Because banks and other organizations express interest rates in a variety of formats (monthly interest rate, a monthly compounded annual interest rate, or many other options), so an annual percentage rate can serve as a good benchmark when comparing two different options.
Companies often hide behind monthly interest rates as a way of deceiving potential customers into thinking that they have smaller interest rates than they do. Other lending organizations will use transaction fees and late fees to create the appearance of a falsely small loan. If you're considering applying for a loan or any kind of lending agreement, it's vitally important to look at the annual percentage rates.
The annual percentage rate is designed to allow transparency in lending practices. The United States Government requires that all lending organizations show their customers the potential overall APR before any transaction can legally be made. If you suspect that your bank is giving you a loan that will eventually cost you, you should look into the underlying APR.
If you've been the victim of predatory lending practices, you may be forced to declare bankruptcy to divest yourself of your debts. If you'd like to learn more about how an experienced bankruptcy attorney can help you get back on your feet, the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office may be able to help you. Please visit our website today to learn more.
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