How to Compare Loan Rates

Video Transcript

"My name is Bill Rae, I'm with HBW here in Florida. I've been in the finance field for well over forty years, and your question today is how to compare loan rates. On the surface, sounds like a very simple question, but once you get into finance, let me assure you most people would be confused by the calculations a lot of these financial institutes use. It's gotten so confusing that several years ago the federal government decided to come up with what they call an APR designation. Simply stands for Annual Percentage Rate. The Annual Percentage Rate simply is the interest on your loan plus all the associated costs to that loan based on an annual or yearly figure. So the best way to compare loans is to look for your APR rate. But be advised, looking at an APR rate can also be somewhat confusing. Although it gives us something to talk about, it isn't perfect. Why do I say that? It might surprise you to realize that if you look at a loan that has a twelve percent APR versus a loan that has an eighteen percent APR, most people would assume that twelve percent is a better loan. But is it really? Internally in that loan you have say things as how do they calculate the interest on your loan? Is it a daily balance? Is it a prior balance? Is it an adjusted balance? You see, it isn't as easy as just looking at it and trying to make a fast decision. My advice, shop carefully, understand your contract, and if need be, get good, sound financial advise. My name's Bill Rae, I'm with HBW, and I'm helping you build wealth."