{"id":29742,"date":"2021-12-07T12:57:39","date_gmt":"2021-12-07T12:57:39","guid":{"rendered":"https:\/\/payment1.com\/?p=29742"},"modified":"2026-06-23T01:43:17","modified_gmt":"2026-06-23T01:43:17","slug":"apr-vs-interest-rate-understanding-the-difference","status":"publish","type":"post","link":"https:\/\/payment1.com\/es\/2021\/12\/apr-vs-interest-rate-understanding-the-difference\/","title":{"rendered":"APR vs Interest Rate: Understanding the Difference"},"content":{"rendered":"

Are you taking out a <\/span>pr\u00e9stamo personal<\/span><\/a> or a <\/span>Pr\u00e9stamo con garant\u00eda de t\u00edtulo de autom\u00f3vil<\/span><\/a>? Chances are you\u2019ll encounter two terms: APR and interest rate. Annual percentage rate and interest rates are two values that refer to a similar concept. Then again, they have subtle differences when you calculate them.<\/span><\/p>\n

As you evaluate the total cost of a personal loan, it\u2019s vital to understand the fine line between APR and interest rate. With this knowledge, you can accurately calculate how much you will owe and if it\u2019s the right loan for you.<\/span><\/p>\n

What Is An Interest Rate?<\/span><\/h2>\n

To understand each term, we need to set the standard definition for each one first. So, what is an interest rate and what is APR?<\/span><\/p>\n

Interest rate<\/span><\/a> refers to the advertised value that you can expect when calculating interest expense on your loan. This is always expressed in percentage and usually is the raw portion of your loan charge. For example, if you have a car title loan for $2000 with a 20% interest rate, you\u2019re paying an extra $400 for the loan.<\/span><\/p>\n

Loan interest rates can go for monthly or annual rates. If you have a loan for $40,000 with a 6% annual interest rate, you\u2019re paying an extra $200 per month or $2400 per year. What makes the interest rate a little less useful is it doesn\u2019t paint the complete picture of your loan.<\/span><\/p>\n

What is Annual Percentage Rate (APR)?<\/span><\/h2>\n

On the other hand, an <\/span>annual percentage rate<\/span><\/a> is a combination of the value of both interest rate and all the fees included in your personal loan, mortgage, or car title loan. By giving you a better picture of your loan, you can prepare better.<\/span><\/p>\n

For example, if you have a $200,000 unsecured personal loan with a 6% interest rate and a loan origination fee of $5000, the calculation changes. You would need to add all the fees together, putting the loan at $205,000.<\/span><\/p>\n

$205,000 puts your annual payment at $12,300, with a different and likely a higher upfront fee. The APR can be calculated by dividing the annual payment by the original personal loan value. Dividing $12,300 by $200,000 means you have an APR of 6.15%.<\/span><\/p>\n

Determining Your APR Value<\/span><\/h2>\n

When you want to determine your APR value, there are three values you clearly need to consider: interest rates, fees, and any value of money that you want to pay for upfront. There are up to as many as five types of personal loan fees that you should expect when getting a loan.\u00a0<\/span><\/p>\n

These are:<\/span><\/p>\n