How Important is APR for my Loan Repayments?

A loan APR has a lot to do with with your loan repayment. If you never look at the APR of a loan how would you know if you can repay it?

What is APR?

The APR (Annual Percentage Rate) is the interest rate and all the other associated costs put into one metric. This makes it possible to do loan comparisons of loans with different terms and conditions.

The APR determines the monthly instalment with which you will repay the loan. Remember a credit provider is investing in you, and in effect taking a risk. The risk is that you will not be able to pay back the money. So to make the credit provider’s investment in you worthwhile an APR is placed on the loan. An APR is basically the tempo at which the outstanding balance of the loan will increase.

Every loan consists of 3 elements.

1. The payback period;
2. the APR (or interest rate);
3. and the monthly instalment.

You need the loan APR to calculate the monthly instalment. And if you don’t know the monthly instalment of a loan, how would you know if you can afford the loan repayments? As a South African borrower, you can rest assured it is vitally helpful step if you want to budget for your loan.

Searching for loans online may become a hard task. Every loan doesn’t have an APR on display to compare. That is why Fincheck has a loan comparison page for your convenience and to show you immediately what APR’s you’re looking at.