Buzz
When taking out a credit or mortgage loan, you are required to pay interest (or financial charges) on the amount borrowed, based on a specific rate for the entire year. This rate is referred to as the APR, or Annual Percentage Rate. Calculating the APR for a credit card can be done in minutes if you know a few key factors and perform a small calculation. However, the APR for a mortgage loan differs from a simple interest rate because mortgages may involve additional fees or costs to secure the loan. Below, Mytour will guide you through the process of calculating the APR for both credit loans and mortgages.
Steps
Understand the basic concept of APR
Be aware that borrowing money comes with a cost. Whether you're using a credit card or taking out a mortgage, you may need to borrow more money than you currently have. With a credit loan, you must pay the lender an insurance fee and financial charges for borrowing the money. These financial charges are known as the APR (Annual Percentage Rate).
So sánh các tỷ lệ APR khác nhau dựa trên tổng chi phí cho vay, lãi suất và phí tổn tài chính. Bảng dữ liệu sau đây sẽ giúp bạn so sánh APR khác nhau. Bạn có thể dựa vào thông tin này để lựa chọn mua thế chấp. Tuy nhiên, bạn nên luôn sử dụng công cụ tính APR trực tuyến để kiểm tra chính xác APR trước khi ký vào bất kỳ khoản vay nào. Thực hiện theo hướng dẫn ở bảng dưới. Lưu ý, hầu như trong tất cả trường hợp, APR gần giống với lãi suất, nhưng sẽ thay đổi tùy thuộc vào mức phí tổn tài chính. Sự khác biệt này là lý do tại sao bạn phải so sánh APR trước khi chọn khoản vay.
Tỷ lệ APR cho từng khoản vay khác nhau và ảnh hưởng của tỷ lệ này lên Tổng chi phí
| Tổng khoản vay | Lãi suất | Phí tổn tài chính | APR | Tổng số tiền phải trả |
|---|---|---|---|---|
| $100,000 | 3.50% | $1,000 | 3.5804% | $163,272.65 |
| $100,000 | 3.75% | $1,500 | 3.8720% | $169,222.44 |
| $100,000 | 4.00% | $5,000 | 4.4089% | $180,462.98 |
| $100,000 | 5.00% | $10,000 | 5.8612% | $212,581.36 |
Understand that APR can be broken down into monthly or daily interest charges.
| Loại định kỳ | Lãi suất | Phí tổn tài chính | APR | Tổng số tiền phải trả |
|---|---|---|---|---|
| Hàng năm | 4.00% | $5,000 | 8.1021% | $110,412.17 |
| Hàng tháng | 4.00% | $5,000 | 7.8888% | $110,512.24 |
| Hàng ngày | 4.00% | $5,000 | 7.8704% | $110,521.28 |
There are three types of APR. APR is divided into three categories: fixed, variable, and tiered. This means that the interest rate you pay may change based on your current debt or the bank's terms. A fixed APR is typically the safest choice, as it ensures you always know how much interest you will owe.
- Fixed APR means the interest rate remains the same throughout the life of the loan or credit card.
- Variable APR can change daily, making it difficult for borrowers to predict the interest they will pay. Be cautious with variable APRs.
- Tiered APR is based on the outstanding debt, meaning the interest rate increases or decreases depending on your current balance. For example, your APR might be 4% for balances under $1,000, but rise to 7% if you exceed the $1,000 threshold.
The average APR is around 14%. This is a significant amount, especially if you cannot pay off the principal balance quickly. The average fixed interest rate is typically below 14%, while the average variable interest rate is above 14%.
You will not incur APR charges if you pay off your credit card balance each month. If you spend $500 on a credit card but pay off the entire balance before the due date, you will not be charged any APR. To avoid paying interest and to maintain a good overall FICO credit score, always pay your balance in full and on time.
Calculating APR for a Credit Card
Divide your financial charges by the total balance owed, then multiply by 1200 to obtain the APR percentage.
Find your current balance on your credit card using the most recent statement. If your statement does not display the APR, you can calculate it directly from the statement. For example, if your current balance is $2,500:
- The statement not only shows the current month's fee. The APR is calculated on the entire balance, so you only need to use that number.
Find the financial charges for your credit card using the most recent statement. In this example, let's assume your credit card statement shows a financial charge of $25 for a $2,500 balance.
- This charge will vary each month.
Divide the financial charge by the amount owed.
Multiply the result by 100 to get the percentage.
Multiply the monthly fee by 12.Calculating APR for a Mortgage Loan
Find an online APR calculator. Search for "Mortgage APR Calculator" in the search bar and click on a result. This is a complex equation and difficult to do manually, so it’s best to use a specialized calculator. There are many free online calculators available. You will encounter the following fields:
- Principal or Loan Amount
- Term or Duration
- Interest Rate
- Fees (Optional)
Enter the loan amount in the designated field on the calculator. In this example, assume you are taking out a mortgage for $300,000.
- A mortgage is simply a specific loan for housing.
Enter the associated fees required to secure the loan (fees) into the requested field on the calculator. In this case, let’s assume the additional fees are $750. If you are only considering a potential mortgage, you may not yet have the fee information. If that’s the case, feel free to skip this as it won’t greatly affect the final calculation.
Enter the interest rate as stated, which represents the annual rate without additional charges. In this example, we are calculating based on an interest rate of 6.25%.
Enter the loan term or duration. Most mortgages are set for a fixed 30-year term. However, you may need to convert this number into months. This can be easily done by multiplying the years by 12.
Click the "calculate" button to determine the APR. This differs from the interest rate as APR reflects the actual cost of the loan based on the total amount borrowed, not just the current interest rate. With the assumed mortgage example (300,000 USD, 750 USD fees, 6.25% interest, 360-month term), you will find:
- The APR for this mortgage will be 6.37%.
- The monthly payment for principal and interest will be 1,847 USD.
- The total interest cost for the mortgage will be 364,975 USD, and the total cost of the mortgage will be 664,920 USD.
Advice
- A mortgage loan is quite complex and involves more than just the loan amount and the annual interest rate. The formula for calculating the APR for a mortgage is not just a few simple multiplication and division steps. As a result, lenders often can't calculate the APR without using a specialized APR tool to determine the formula. When shopping for the best mortgage loan value, you can usually find the necessary information to enter into the APR calculator from online lenders. Comparing different lenders when considering a mortgage is always a good idea.
Warning
- Be aware that you need to consider all hidden fees when calculating the APR for a mortgage. If a lender fails to provide all the costs associated with the loan, look for another lender. All fees must be clearly disclosed when you apply for the loan.
Necessary tools:
- Credit card statement
- Calculator
- Paper and pencil or pen
- APR calculator (online)
- Mortgage loan information
