APR - the lowest number on the poster with the greatest value for consumers

Posted by bara 02/01/2014 at 13h56

The annual percentage rate is a key indicator of loan pricing. Loans are with him among themselves exactly comparable and we can better understand financial jungle. Abbreviation APR means annual percentage rate, indicates the percentage of the amount due, which the consumer has to pay for period of one year in connection with a loan, their administration and other expenses associated with their drawing. It therefore includes all costs which are associated with the loan. We can see the difference between the interest rate and the APR here. 
Other costs associated with the loan are:
  • charges relating to the assessment of loan applications ,
  • fees for the contract ,
  • management fees for loan,
  • fees for account maintenance 
  • fees related to the transfer of funds,
  • the first installment overcharge,
  • payment protection insurance, etc.
For improve consumer´s protection, providers must show RPSN in their bid since 1 January 2002. If the provider fails to meet this obligation, he faces from supervisory authorities sanction. A similar obligation applies to providers in other EU countries, as is clear from Directive 98/7/EC. They downplay the importance of the APR or they try to camouflage in the form of tenders 
proclaiming: APR from … ( very confusing prepositions – your APR will be probably different number). They report APR like very small font in background their bid. This provider´s behavior have reasons, because who would brag the real amount that you will must pay for your loan.
The amount of APR depends on amount of the loan, repayment period and the number of installments. Generally speaking, the smaller amount borrowed for a shorter period, the APR is higher. We can compare the APR only in offers with similarly high loan to a similarly long time!

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