When you’re applying for a loan, there’s a lot of terminology to get your head around, be it APR or interest rate, for instance. But contrary to popular belief, personal loans aren’t actually that complicated. What’s more, working out the rate of interest on a personal loan is relatively straightforward, too, and we explain how to go about it in this article.
What exactly is APR?
The Annual Percentage Rate – APR – of a loan takes into account the interest rate and all other charges that you will pay on a loan in one year. Lenders like Koyo Loans are able to access this information through Open Banking data, which enables them to offer you a much fairer rate based on your current financial circumstances. Other lenders rely solely on your credit score, which is predominantly based on your history of making payments on time.
Rather than just looking at interest, APR provides you with a much clearer and more realistic picture of how much you will be required to pay back when you borrow money. Therefore, it helps you easily ascertain whether or not this form of credit is right for you and if it represents good value compared to other offers you might be able to access. Overall, APR is a percentage figure given by a lender, which incorporates all of the charges and interest you will be required to pay in one year if your credit application is successful.
How do you use a personal loan calculator?
One of the best ways to quickly work out the APR on your loan is to use a personal loan calculator. For instance, Koyo Loan’s calculator is super simple to use and provides you with a good idea of the cost of borrowing before proceeding with your application. Here’s how to use a personal loan calculator to your benefit:
Enter the amount of money that you’re hoping to borrow into the calculator. If you’re borrowing from Koyo Loans, that amount should be anywhere between £1,500 and £12,000.
Next, you need to consider the amount of time you need to pay the money back. You can usually select a period of between six months and five years, which you can input into the calculator alongside the amount you wish to borrow.
Last but not least, you will be provided with the results of your loan calculation. The figure given will be a representative APR, as well as the amount of money you will need to pay back over the duration of the loan.
How to apply for a personal loan
Once you’ve used a calculator to assess your options, you’re all set to apply for a personal loan. The good news is that it takes a matter of minutes to apply for a personal loan online. You will need to submit your personal information and some basic details about your finances before submitting your application. If successful, you will usually have access to the money within 48 hours of submitting your application.
Unsecured personal loans are a great way to borrow money as they’re quick, easy to apply for, and can be used for a range of purposes. So, now that you know what APR is get started with your research and discover the best value loan for your financial circumstances.