Personal loans and credit cards are mechanisms to obtain money in exchange for a double commitment: to return the debt within the term agreed with the bank and to reimburse with the money a certain extra, which would be the interest charged on the loan. The interest rate would therefore be the price to be paid for borrowing money through a personal credit or card.
How is the interest rate of a loan calculated?
To calculate the rate or interest rate of a loan it is essential to take into account two fundamental parameters, which are the TIN (nominal interest rate) and the APR (equivalent annual rate).
The nominal interest rate (TIN) indicates the percentage that the bank will charge for the amount borrowed in each agreed time period . In the specific case of credit cards, the interest rate is usually expressed as an annual rate. In this regard, it is very important to know which are the best credit cards, depending on both the credit limit they offer and the required interest and the payment method.
The equivalent annual rate (APR) is a much more complete indicator than the TIN, since it not only takes into account the agreed interest rate, but also other fundamental parameters to know what the real cost of the loan is. Specifically, the APR includes the fees charged by the bank (opening commission, study commission, partial cancellation commission, etc.), the debt repayment term and the total amount borrowed.
However, it must also be taken into account that there are concepts that are not included in the APR. This is the case with the so-called “linked products” , which are those products or services that the bank can associate with the granting of the loan, such as hiring a credit card, which, unless it is free, would entail the payment of a Certain annual fee.
The best personal loans based on the interest rate
When hiring a personal loan, it is essential, therefore, to look at both the TIN and the APR , since the loan with the lowest nominal interest will not always be the most convenient for the user. The first factor to consider is provided that the nominal interest rate is not too abusive.
However, the APR will offer us more reliable information at all times, including the vast majority of the variables to be taken into account. Therefore, when making a comparison between different credits, a loan with a lower APR is almost always more advantageous, even if its TIN is somewhat higher.
In an era like the current one
Where interest rates are really low, one of the recommendations to take into account to discover loans with better interest rates would be that both the TIN and the APR did not exceed 5% at sumo. Obviously, the amount of commissions that the bank will charge should also be thoroughly studied. Finally, it is highly recommended to use the comparators of personal loans and online cards, as they are quite easy to use tools.
In the case of loans for young people, given that they do not usually enjoy a buoyant economy, one of the solutions would be to apply for a personal loan online, there being in this sense different financial portals that offer young people a wide range of alternatives of financing.