When borrowing there are a variety of questions that you need to ask the lender to ensure that you are getting the best deal and that you understand all the different elements.
Firstly, you will need to establish whether the interest included in the APR varies or is a fixed rate. If the rate is variable, your repayments could go up or go down but if the rate is fixed, your repayments will stay the same.
Secondly you will need to find out whether there are there any charges that are not included in the APR. This could cover charges for optional payment protection insurance, default charges and certain other charges such as balance transfer fees.
You will also need to make sure you understand what the extra charges are, whether you really need the services offered, how much you would have to pay and when you would have to pay.
There will usually be conditions of the loan or credit, such as whether you have a choice about how and when you make the repayment and how much it would cost you to pay the loan off early, either in whole or part. In some cases there may be charges for early repayment and you need to understand what these would be. You also need to discover whether you would be able to change the date of regular payment.
The most important factor though, is whether you can afford the monthly payments. A more expensive loan, with a higher APR could have lower monthly payments if they are spread out over a longer period of time, but you will pay more in the long run.
Baines and Ernst Ltd