APR Uncovered on International Student Loans
April 18th, 2014 by Jennifer Frankel
For any international student considering taking out a student loan for studying abroad it is vital to know what APR is and how it affects them. APR stand for annual percentage rate. Understanding the APR to your loan can be a bit confusing, as most people tend to confuse APR and interest rate. The APR on a loan is expressed as a percent point, which is generally higher than the interest rate. APR gives more of the total cost of a loan including the interest rate and the costs to borrow from the bank. The APR was mandated by the government in order to stop bad loan practices from banks. While students may get a great low interest rate, there may be many hidden costs that offset the great interest rates. Since every lender uses the same calculation to determine the APR that they will offer, the APR can be used to compare the real costs of loans from several different lenders. When shopping for a student loan, it is a good idea to compare the different APRs being offered by lenders. Here are a few tips to find the best APR while also getting an understanding of the expectations of the APR and your interest rate.
- Shop for the lowest APR. The lower the APR, generally, the better deal you are getting. In the same sense as interest rates, the lower the percentage point, the less you will be paying.
- Make sure you read the terms of the loan and are happy with the APR. While low costs are great, additional factors like the application process and repayment period can also be important when choosing the right lender.
- Question anything you do not understand. Regardless of your financial experience or background, inquiring about a loan can be confusing and nerve-racking. Loans will have fees that you may not be familiar with like application fees, origination fees, and sometimes the lender will even charge for a credit check.
- Talk to a professional! Even after research getting a loan can be confusing. Since getting a loan is a major commitment, do not be afraid to contact a professional to go over the terms of a loan with you and even help you to find your best option.
- Reach put to someone who has been in your shoes. Believe it or not, you are not the first person to get a student loan, and you won’t be the last. Talk to someone who knows about loan lending like a parent, friend or classmate.