What is 0% APR. I saw Ford commercial promoting 0% APR. I think 0% APR or 0% is same. Right? What is the difference?
Quote:
Originally posted by ashedfc
Quote:
Originally posted by Desi # 1
What is 0% APR. I saw Ford commercial promoting 0% APR. I think 0% APR or 0% is same. Right? What is the difference?
0% APR stands for 0% Annual Percentage Rate.
Yes it is the same, but here's the difference-
1. Money Saved: Over the typical 5yr life of a car loan, the purchaser spends a great deal on interest rates alone, that can be saved.
2. Credit Score: Only an excellent credit score will qualify for such loans.
3. Repayment Pitfalls: With zero-percent loans, there are often clauses that bump the interest rate up to a high level if a late payment occur.
4. Large Down Payments: This offering of zero percent financing might require a large down payment on the purchase, more up-front cash. So you tend to loose the time value of your initial money.
5. Length of Loan: The terms of zero percent loans often require a much shorter repayment period, meaning higher monthly payments.
If I now say 2% APR or 2% - would that be same?
Posts: 2873
Location: Western Hemisphere
Posted on: 20-10-10 12:59:48
Location: Western Hemisphere
Posted on: 20-10-10 12:59:48
Quote:
Originally posted by ashedfc
Quote:
Originally posted by Desi # 1
If I now say 2% APR or 2% - would that be same?
YES,
If the fine print says 2% APR or 2% means APR, then it's same.
This is just technical stuff. Just because it says the rate is 2% annual rate doesn't mean you pay 2% over the life of the loan. The "effective rate" is slightly higher than the APR.
In other words, once you are done all the payments, if you add up the $ you paid as interest at the end of the loan term and then calculate the interest paid, you'd realize you paid higher than 2%. How much higher depends on how frequently interest in compounded (daily, monthly, quarterly, etc), how long the loan term is and the rate itself.
-----------------------------------------------------------------
Dimple2001
