Understanding APR: How It Influences Your Loan Costs and Repayments

Bajaj Finserv13 Jan, 2025Finance

The Annual Percentage Rate (APR) is a critical factor in determining the true cost of borrowing. It reflects the yearly interest rate charged on loans or credit cards, including additional fees or costs. Understanding APR is essential as it helps you compare different financial products effectively. For instance, a loan with a lower APR may seem attractive, but hidden fees can inflate the total cost. By evaluating the APR, borrowers can identify the most affordable options and avoid surprises. When comparing loans, always prioritize the APR over just the interest rate. This approach ensures you’re making an informed financial decision, saving money in the long term.