What is APR?

by DeLadurantey Law Office, LLC on January 5, 2010

When dealing with credit cards, loans, mortgages, and debt, it is important to be familiar with any terms that might arise. The annual percentage rate, or APR, is the annual rate that a loan company charges a borrower for borrowing privileges. In other words, the APR is the interest rate over an entire year, rather than monthly. The number is expressed as a percentage, which represents the annual cost of funds over the lifetime of the loan. The number also includes any additional fees and costs that are associated with the loan or credit card.

The APR is a useful number when comparing interest rates from different sources. Because of the wide variety of ways a company can represent an interest rate– as an effective monthly interest rate, an annual interest rate compounded monthly, an annual rate in advance, and so on– some loan sources may attempt to make their interest rate seem deceptively low to consumers.

In addition, different loans may have different transaction fees, late penalties, or other varying factors. The APR helps eliminate this deception and confusion and lets consumers compare interest rates between lenders more easily. Lenders and credit card companies are required by law to clearly show customers the APR on any transaction before any agreement is made.

The APR is meant to help consumers make smart and informed choices when choosing loan sources and credit cards. Unfortunately, companies often find other ways to deceive consumers. In other cases, borrowers might just find themselves too far in debt with few places left to turn. In these cases, it is advised to seek legal assistance to help you consolidate your debt or file for bankruptcy.

If you are in financial trouble, the Milwaukee bankruptcy lawyers of the DeLadurantey Law Office, LLC are here to help you. To learn more about debt consolidation, bankruptcy, and other options for a fresh financial start, contact our offices today at 414-377-0518.

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