APRs (annual percentage rates) are finance charges applied to loan amounts. Finance charges are applied to loans as a general cost for receiving a service. They are also applied because lenders cannot earn interest on money not in their business accounts. Therefore finance charges are both the cost to the borrower for doing business, and a way to recoup lost income for the lender.
APR ranges are dependent upon numerous factors. The most significant factors are your credit rating and FICO score. An APR is generally decided soon after an application is submitted and approval for the loan is granted. Rates are generally unable to be negotiated.
Exceptions to this include scenarios where borrowers have A or A+ credit ratings and/or lenders grant rate matching. Rate matching is when a borrower finds a better loan rate elsewhere and asks their lender-of-choice to match the rate in order to get the borrower’s business.
Refinance loans are either secured or unsecured. Secured loans rely on some type of collateral to guarantee loan repayment in case of default, death or other valid emergency.
Unsecured loans do not use collateral and therefore tend to have higher APRs and less friendly repayment terms for the borrower. Loan refinance options are available for a variety of loan types and purposes. The most common type of loan considered for refinancing is the home mortgage.
This is done to change mortgages from thirty-year terms to fifteen-year terms, or vice versa. This is also done as a way of reducing the interest rate, which reduces monthly payments, which helps provide extra cash each month for paying bills.
Personal loans can also be refinanced, albeit sometimes in a different way. Loan refinancing can help you achieve numerous financial goals and has multiple benefits as described below.
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