Consolidated loan’s death syndrome # 2 – Focus on the APR rather than the interest rate


When it comes to consolidated loans, there are a lot of good advice, tips and to-do lists that are good to know about. It can feel like a complicated process both taking a consolidated loan and then managing it.

However, there is one thing that is more important than all the other good advice – a deadly sin. When it comes to deciding on the consolidated loan, there are several factors you can look at.

It is about comparing the different solutions, which is possible when you have obtained several offers. But here you should focus on APR and not the interest rate.

Focus on interest rates rather than APR

OPEN stands for Annual Percentage Costs , and when you compare different consolidated loans, it is possible to see which ones are the cheapest. Always choose the consolidated loan with the lowest APR.

One of the elements of being mistakenly focused a little too much is the interest rate. But it is a really bad idea to look blindly at it and it is deadly sin no. 2: To focus on the interest rate rather than APR.

There may be special cases where fees and founding costs may result in a distorted picture of the cheapest consolidated loan. If you choose the lowest APR, these costs are included and you are sure to choose the cheapest solution.

APR is always the most important thing!

When it comes to consolidated loans, the APR is always the most important. The error of looking only at the interest rate when you compare is that you can come to the wrong conclusion. Whether it is expensive or cheap depends on a variety of expenses, including the formation costs, fees, interest rates, and all other small costs.

Some consolidated loans may have a low interest rate but in return have a very high fee for founding. In this way you can be “fooled” if you do not have a look at the AOP level

Example 1: Amounts of 5,000 to 15% in interest and with DKK 800 in formation costs.

Example 2: Amounts of 5,000 to 16% in interest and with DKK 100 in formation costs.

Here, the marked difference in exploration costs of DKK 700 can lead to example 2 being the cheapest, although it has the lowest interest rate. It will OPEN clarify whether or not the case is.

The interest rate is included in the APR, therefore you can sanctify yourself by keeping an eye on the annual costs. All consolidated loan providers online must inform about it, therefore it is easy for you as a borrower to compare the various offers with each other.

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