Interest rate ( APR )

Interest is the amount of money that the bank charges you for letting you use its money. The amount of interest charged depends on the type of loan and the length of your loan. This interest can either be variable or fixed.

A fixed rate is an interest rate that stays the same throughout the length of the loan. A variable rate is an interest rate that may change during any period of the loan, depending on the conditions of your loan agreement.

Along with interest you should also pay close attention to the APR , which stands for Annual Percentage Rate. The APR includes other charges or fees to reflect the total cost of your loan. You are always looking for the lowest APR .

Fees are costs that the bank charges for reviewing your loan application and/or taking care of your loan account. Different loans have different kinds of fees. Some loans like credit cards have no fees. For example, you may be charged a $25 application fee for an auto plan by banks.