Interest rate and APRC. What is the difference?

Do you know the difference between AMP and loan interest? Although we hear these concepts almost all the time, many people still don’t know what they really mean and how they differ. In today’s article in a nutshell we present what and how to understand.

What is the AMP really?

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We often check them when we are going to apply for a loan, but we do not know that this abbreviation can be misleading. How to check the AMP to choose the best loan proposal for you? What costs are not included in the AMP? Those that are difficult to estimate – e.g. the cost of paying out a loan or the cost of obtaining a bank account. Many people decide to borrow for a longer repayment period because they mean lower installments. However, this is very risky, because the longer the loan period, the lower the AMP, but the total cost increases.

Banks and loan companies often present a representative example on their websites, but it is worth remembering that it does not work in every contract – what the AMP looks like on a representative example, and how it will look in the case of our loan, is a completely different matter. In addition, it is worth remembering that you can count on better credit conditions when you have the support of a good creditworthiness assessment.

How to read AMP so as not to make a mistake when choosing a loan?

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Compare loans for the same period of time. Compare the same installments with each other – i.e. equal installments with equal installments, and decreasing installments with decreasing installments. Check if the AMP includes insurance and whether the commission is included.

When making a credit decision, always pay attention to the installment amount and the total cost of the loan – you must be able to pay them back. Specify the amount of the installment you are able to pay monthly, and then look for such a loan so that the total cost is as low as possible.

Loan interest rate

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The interest rate on the loan is – simply put – the price of the loan. It consists of not Reference rate (profitability of TLV bills issued by the TLV), as well as the bank’s margin (what the bank actually earns on credit). The sum of interest paid, the installment amount and the total cost of the loan depends on the interest rate. The lower the interest rate, the higher the creditworthiness, which means that the higher the interest rate, the less favorable the loan offer may be.

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