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The Annual Percentage Rate or APR is a measure of the cost of loan that expresses the finance charge, which includes interest, and may include other charges such as yearly rate. Generally lower the APR, the lesser you will pay in interest.
APR is the best way of comparing different loan, mortgages and any credit cards. The lender has to tell you the initial interest rate i.e. what is APR, when you apply for a loan. If the loan provider hesitates, avoid take the loan or any other product for that matter, as they could be trying to hide something.
Most loan providers will give you a choice between fixed and variable rates. If the rate is fixed, your loan interest charges and repayments will remain the same. If it is variable, then your repayments could fluctuate depending upon the change in market rates which could be good or bad. Calculate your repayments carefully, so if the interest rates are hiked, they should not fall heavy on your pocket.
Generally speaking, the lower the APR, lower the interest payments. APR's vary from lender to lender, so one should shop around before finalising the loan deal.
It is mandatory for the loan provider / lender to provide you enough information that discloses about rate changes, how the rate is determined, what additional amount, the margin to determine the new rate.
Some loans with low APR balance have stringent conditions. Read the agreement terms carefully as one is legally bound by them. Inquire if you can pay off your loan early without any redemption penalties.
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