APR? If you're anything like me you may have not necessarily known what APR means or what
it is or how its even calculated. So in this video I'm gonna talk to you about
four things regarding APR. But before we get started I have a quick message.
Welcome to another video! If you're new here my name is Duane with howtobuildcredittv.com.
And on this channel we talked about everything you need to know
about credit, credit cards and how to make money using credit cards. So if this
sounds like something which you're interested be sure to subscribe to our
channel and click that notification bell so you don't miss a thing. Okay so if
you're anything like me chances are you've seen APR because you you know you
have a credit card and so on and so forth. But you may not necessarily know
exactly what that means. Well in short APR stands for annual percentage rate
and the annual percentage rate is calculated by using a couple of
different things. So it's easy for us to just say you know what APR is the same
thing as interests when in reality APR is a little more than just your interest.
You see APR ends up being your interest but it also ends up being any kind of
finance charges that you have. Let's say for example you have a credit card and
so you have let's say you have $2,000 credit limit and then you owe currently
$1,000. So you're using $1,000 out of your $2,000 credit limit so of course
you're gonna have interest on the card right. So your interest is going to be
there or another word for interest probably could also be like your finance charge
right. So of course they're gonna charge you let's say they charge you $20 on
interest every single month. Ok so you're going to have your whatever your rate is
currently let's say your interest rate is 15 percent. So you're gonna have 15
percent but you're also gonna have calculated in the APR the interest that
you're also paying or the $20 that you're paying right. So you're gonna
basically have the 15 percent plus the $20 and that's also going to be
calculated over months if you continue to have this $1,000 balance on that card
for months. And so in short it makes it a lot easier for us to just say you know
what APR is the same thing as interest and that may not be a bad way to look at
it. However there are three different types of APR. There's fixed APR, there's
variable APR and then of course there's tiered APR. So fixed APR is exactly what
it is. fix it's never going to move you're
fixed APR can be 14.5% and that's what it's gonna be it's never gonna fluctuate
which is really really good. A lot of people see fixed APR on something like
an electricity bill. So like they'll say well this rate is fixed so in other
words it's not gonna move. You're going to pay the exact same amount of
kilowatts on your electricity bill every single month. It's not gonna fluctuate,
however some of us that are unlucky we've pay electricity bills that has a
variable APR which is ridiculous because what that means is it can fluctuate
every single month and you can pay a lot this month and not pay a lot the next
month. And normally that happens to people that just may not know. I've been
there before and I had no idea. So you definitely want to stay away from
variable APR because that fluctuates a lot. Now when it comes to tiered APR that
basically would be like you would pay a certain amount based on a certain dollar
amount. So let's say your tier APR would probably be like let's say you owe less
than $1000 on a particular loan. You may pay 5.5% for that $1000. Let's say you
owe $1,500 you may be paying 7.5% because it's above $1,000. So that's how
tiered APRs work. So when it comes to APR the best thing to do is to have a low
APR. Or impossible if you're having an APR because you have a credit card you
definitely want to make sure that you just pay the balance off so you don't
have to worry about APR. You have to worry about finance charges, interest any
of that. You just pay it off. So the reason why it's important for you to
have a low APR if you are gonna have an APR is because this is going to save you
a lot of money over time. And in order to get a low APR you need to have a good
credit score. And this is another instance where credit is important.
Credit is king. You definitely want to make sure that you have a decent credit
score because you want to give yourself the opportunity to get the best deals
that are available in any kind of loan or credit card that you would actually
get. So you can get a low APR because you have good credit and of course
they're going to offer the best rates possible to you
as a reward for having good credit. So that's how you can get low APR.
Okay so when it comes to having high APR
clearly the opposite is true right. So if you have a bad credit score chances
are you're gonna get stuck with having a high APR. Like you're gonna go in there
and say hey I really need a car and this is probably the situation where a lot of
people find themselves where you get a really bad APR right. You go in you
really need a car let's say you don't have a car at all. This was me back in
2015 I didn't have a car my car that I have had since 2003 finally decided to
stop working in 2015 and I was like man I don't know what to do. I didn't really
want a car note because I'm smart and I was like I don't like car notes you know
I just don't like car notes. And so I was like man I really don't want a car note
but I do want a reliable car. So I found myself you know trying to get a car loan
and of course I did get a car loan and I got a car loan with Capital One. But the
thing is this is where they get you. Let's say you go in you don't have a car
and you need a car bad right. So of course don't like any will work with you
sure we'll get you approved so on and so forth but then you have a ridiculous APR.
And you're paying like 20% on a car loan which is ridiculous paying 20% on any
kind of loan including credit cards is ridiculous; But depending on the
situation you know you might like fall for it and say well I definitely need a
car so 20 percent APR okay sign me up. You know because clearly you need a car
to go to work and you can't pay your bills if you don't go to work. So that's
how you can end up in a situation where you have high APR because you have bad
credit, you know and it just happens. So just be careful of that. So real quickly
the best way to ensure that you have the lowest APR you're getting the best deal
possible is to make sure that your credit score is intact. Now I make a lot
of videos talking about your credit score and the importance of the credit
score and how to have a high credit score. And of course I'll be sure to link
one at the top right of this video so that you can learn how to improve your
credit score. There are five categories that make up our credit score and it's
important to know how that works together and how you can tweak each
category so that you can maximize it and get the best credit score possible. So
APR, APR rates are you know it's something that we all have
to deal with especially if we live in America. We want to make sure that we
have you know a loan for our car. We got to make sure we have loan for a house,
you want to have credit cards so that you can have credit and build credit and
so on and so forth. So APR is very important I hope this video shines some
light on APR and what it is and what it entails. If you have any questions please
be sure to leave them below in the comment section. I'll do my best to
answer it. Thank you so much for watching the video be sure to give it a thumbs up
if you liked the video. Share the video with somebody that may find it helpful.
If you haven't subscribed to the channel go ahead and smash that subscribe button
and click the notification bell so you don't miss anything. Once again my name
is Duane with howtobuildcredittv.com and I approve this video. I'll see
you in the next video. Until next time take care and be blessed. Peace!
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