Loan interest rate
Because not all loans carry equal interest, Triple AlertSM
wants you to understand
exactly what you're paying for credit
, particularly since uninformed
decisions can lead to financial jeopardy. The first term is an annual percentage
A monthly interest rate of 1.5 percent for a loan may seem reasonable enough, but a consumer needs to know the APR before he or she can compare lenders. Some lenders promote introductory offers of loans at what are called "teaser" rates. These rates are relatively low, but are soon replaced with much higher rates.
When comparison shopping for a vehicle, house or a credit card
should seek out the lowest APR possible and lock it in place if possible. In
the case of credit cards, though, you need to add other factors into the equation
such as length of grace period
, late payment
and potential increases in the interest rate with relatively little warning.
If your interest rate is tied to an economic index
, as is the case with
an adjusted-rate mortgage
, then the rate can rise or dip. With a home
loan, the ideal situation is for the lender to guarantee the best rate, so that
you can avoid being locked into a relatively high rate at a time when rates
are going down.
You may clarify terms
with potential lenders
so that comparisons
are viable. Does the fixed rate
hold true for the entire length of the
loan? Or is the lender really talking about a fixed rate for just part of the
loan period? Is there a relatively low interest rate period followed by a balloon
Before purchasing a home, you'll want to understand how many points are involved in the transaction. One point represents one percent of the loan's face value. With any loan, you'll want to study tax laws to see if you can't deduct the interest.
Some loans such as certain home equity loans
require interest-only payments.
Although they're fine during times when a consumer might be trying to stave
, these payments never reduce the