If you’ve finally found the Honda vehicle of your dreams and are about to start the buying process, one term you probably keep seeing pop up is APR. If you’re not completely sure what APR is or why it matters, we’re here to change that. This guide to APR looks to define the term and explain why it’s so important in the car-buying process.
APR is the acronym for Annual Percentage Rate, and shows you what you will be charged if you borrow from a lender. Basically, APR is how much it will cost you to borrow money. The number is expressed as a percentage, representing the actual yearly costs of funds over your loan term. This rate includes fees and additional costs associated with the loan, allowing you to determine if the loan you’re receiving will actually fit within your budget. APR is also a handy tool to help you compare loans from multiple lenders.
Many people believe that APR and interest rates are the same thing – but they aren’t. Interest rate is actually one of the factors that can change your APR, so you will want to know both the interest rate and the APR when you’re looking at your automotive loan. Other influential factors include transaction fees, late penalties, and more.
You need to know your APR so that you know how much you’re going to be paying to borrow money from your lender of choice. The lower your APR is, the less money you will spend over time. That’s why you typically want to stay away from debt with a high APR. This will keep you closer to your budget.
If you have any questions or need help finding a low APR loan for your next vehicle, then consider speaking with the Honda of Tiffany Springs financial department. Our team of experts will help you find the right car for your needs, whether you’re looking for a new CR-V for your family or an Accord for business.