What is zero percent of APR?
The annual percentage percentage of zero percentage (APR) means an annual percentage of zero and does not require any interest at all. APR differs from the loan strut in that all fees that can be charged for generating loans fees for the origin of the loan are common. Banks can charge fees to credit card holders simply have a credit card for the privilege. Fees are part of the calculation of APR. The seller cannot get free financing, so he must be compensated in another way. One way to pay the cost of financing is to add it to the price. If a furniture dealer offers a living room set for $ 3,000 USD (USD) with a zero percent of APR for three years, the buyer can reasonably calculate the cash price willing to pay three years of interest at The price. For example, at an interest rate of 5% per year, the buyer would multiply $ 3,000 by $ 0.05, which would provide interest costs of $ 150 per year, which would be $ 450 in three years, which would be a reasonAll cash price of $ 2,550.
zero percentage APR in the credit card industry is used to attract people to raise the amount on their credit cards. The credit card holder is offered an interest -free loan for several months, then the interest rates will return to what is normal at the time. The real hope of banks is that the card holder will be late or passes through his credit line to trigger sanctions. Sanctions are many times a fee and a significant increase in interest rate charged by a credit card holder. A large fraction of credit card profits comes from late payment and credit line penalties.
When a zero percentage of APR is offered to the consumer, he must think about the situation carefully. FREE is a very good price, but businesses can not really afford to offer the lowest prices and free financing. Banks will certainly not offer free use of their money, evenFor several months, unless they expect them to earn more money in the long run than they lose from free funding. The consumer can use the offered zero percent of APR if it can save money for something it needs rather than just buy an unnecessary item.