Daffyduck528
Expert Expediter
I don't think I follow you. You always need to know the APR when you borrow money.
5 Owner Operator Mistakes to Avoid
- Thread starter Lawrence
- Start date
I don't think I follow you. You always need to know the APR when you borrow money.
I was referring to the difference between an APR loan and a Simple Interest loan and yes you need to know the interest rate !!!!!
Daffyduck528
Expert Expediter
Ahhh. I follow you now. Yes anything that is adjustable, beyond a typical line of credit, should be avoided like the plague.
It's not the adjustable, although that is a no no. Its the way APR interest is calculated versus simple interest. APR costs way more.
Last edited:
fr8hlr521
Active Expediter
APR interest is another way to say compound interest, where a running balance is used to figure interest charges. Simple interest just uses the original balance. As a rule, if you are receiving the interest like through a loan you made to someone, or another investment, you want compound interest. If you are paying the "vig", simple interest is MUCH cheaper.
Daffyduck528
Expert Expediter
I'm getting a bit more confused on this, I think. I did just review my loan docs and it is a simple intrest loan and never mentions apr, although it does mention nominal intrest rate and that it's a fixed rate. I'll have to check with my lender on the difference.
Maybe this will clear it up a bit. On a simple interest loan if you borrowed 10 k @ 5% for 1 year the interest would be 500 $. If the term is longer it is 5% of the remaining balance every year. If it is not done on whole years or paid off early then the interest is calculated for the months / days used.
Compounded or APR is done monthly on the balance owed if I am not mistaken. As far as an interest rate goes for borrowing there are 2 types, variable and fixed. Generally variable will be on mortgages and credit cards ( although fixed rates are offered on these ) and fixed rates apply to vehicles and boats and other consumer goods but these are a general description and both types could apply depending on the person or the business you are dealing with.
Hope your not more confused !!!! LOL
Compounded or APR is done monthly on the balance owed if I am not mistaken. As far as an interest rate goes for borrowing there are 2 types, variable and fixed. Generally variable will be on mortgages and credit cards ( although fixed rates are offered on these ) and fixed rates apply to vehicles and boats and other consumer goods but these are a general description and both types could apply depending on the person or the business you are dealing with.
Hope your not more confused !!!! LOL