Most people know that when they borrow money, they are going to pay it back plus interest. The amount of interest is called the interest rate. It is worth understanding a good rate for a personal loan when you need quick personal loans.
Variable factors go into a loan rate. To understand what a loan rate depends on, you need to understand APR and secured and unsecured loans. Read on for a brief discussion to help you understand loan rates.
What Determines Loan Rates
Loan rates are the rates of interest charged on the amount borrowed or percentages of the borrowed amount. For example, a 15 percent interest rate of $4,000 borrowed means $600, or a payoff amount of $4,600. Variable factors go into the rate charged by the lender, such as the borrower’s financial history and sometimes their credit score.
Some lenders will not require a credit score but evaluate the borrower’s personal situation instead. For example, good credentials such as proof of income, letters of reference, current personal identification, and collateral such as a clear automobile title may be accepted instead of credit history.
What is APR?
Lenders will determine what they will charge you to borrow the loan when offering a loan. This is the annual percentage rate or APR. The APR is the interest rate (percentage of the money borrowed) plus any loan fees.
A general rule about APR is that the better your credit record, especially your credit score, the lower the interest rate or APR. You want to know what APR is being offered so that you know how much total you are expected to pay back. Understanding what APR you qualify for is important in understanding what you might want to do to maintain or improve your credit record.
Secured vs Unsecured
When you want or need a quick personal loan, you will need to know if the loan is secured or unsecured. Secured and unsecured loans will have different APRs, and you may or may not be in a position to qualify for a secured loan. A secured personal loan requires collateral or something of value signed over to the lender as security. Collateral is forfeited to the lender if the borrower doesn’t pay the loan back.
Secured loans have lower APRs because the lender has more security that the loan will be paid either by money or forfeit of collateral. Unsecured loans don’t require borrowers to provide collateral but are more difficult to qualify for than loans secured with something of value.
Personal Loans in Arizona
If you need quick personal loans in Arizona, consider Tio Rico Te Ayuda loan centers. Consider fast, easy cash loans even if your credit isn’t perfect.