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FEB 22, 2022

The difference between APR and interest rate

By

Caribou

2 min read

APR and interest rate are important terms to understand in any auto loan or refinancing process. This is because they refer to different rates which can impact your payments.

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APR and interest rate are often different when it comes to your auto loan. This is because they include different line items and factors in their calculations.

APR (annual percentage rate): An APR is how much it costs to borrow money over the course of a year PLUS other fees. This means your APR will be higher than your interest rate in most cases.

Interest rate: An interest rate is how much it costs to borrow money over the course of a year. For example: If you borrow $1,000 with a 2.0% interest rate, you’ll have to pay an extra $20 after a year.

You’ll see both when you refinance, but your APR shows what you'll pay at the end. Since APR includes any other additions to your loan, you’ll want to use that when you weigh the total cost.

But that doesn’t mean your interest rate isn’t important! Your interest rate can change because of your credit score, debt-to-income (DTI), and loan-to-value (LTV). These factors may affect your ability to refinance your auto loan. When you make improvements in these areas, you’ll often see your interest rate decrease.

This is one of a few reasons why you may want to refinance your auto loan. If your credit score, DTI, or LTV are better than they were when you took out your loan, you might be able to save money on interest. Depending on how big the change is, this can be hundreds or thousands of dollars a year that you get to keep.

As a Caribou customer, you get to see a full breakdown of add-ons and fees when you refinance. Everything from the initial interest rate to the final APR is included, so you know what you’re paying and why.

With Caribou, you could start saving today!

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Contact Details
NMLS #1746612
1.877.445.0070

Mon - Fri: 9am - 8pm EST

Sat - Sun: 9am - 4pm EST

1717 Rhode Island Ave, NW, Suite 500 Washington, DC 20036

Caribou Insurance Services, LLC
1.877.255.2660
Mon - Fri: 9am - 8pm ET
insurance@gocaribou.com


* Refinance savings may result from a lower interest rate, longer term, or both. There is no guarantee of savings. Your actual savings, if any, may vary based on interest rates, the repayment term, the amount financed, and other factors.

+ To check the refinance rates and terms you qualify for, we conduct a soft credit pull that will not affect your credit score. However, if you choose a loan product and continue your application, we or one of our lending partners will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

++ Social security number is required should you choose to move forward in the loan application process.

** APR is the Annual Percentage Rate. Your actual APR may be different. Your APR is based on multiple factors including your credit profile and the loan to value of the vehicle. Advertised 1.99% APR is based on a representative example of refinancing a 2021 or newer vehicle with mileage of less than 85,000 miles and a FICO score higher than 740. Lowest Rate not available in CA, ME, MD, MS, NE, NV, PA, WV, WI and VT. Not all borrowers will receive the lowest rate. All applications are subject to verification of employment. We do not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Insurance savings will not result from lower APR.

Terms and Conditions apply. Caribou reserves the right to modify or discontinue products and benefits at any time without notice. Participating lenders, rates and terms are also subject to change at any time without notice. The information you provide to us is an inquiry to determine whether our lenders can make you a loan offer. If any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. We do not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors.

Insurance products offered through Bindable and Caribou Insurance Services, LLC. Caribou is working with Bindable who owns MyLifeProtected and MassDrive Insurance Group, LLC, the licensed agent for all products.


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