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Equity loan - APR vs Contract Rate?


Damien
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My wife and I just signed for an equity loan with Beneficial. Beyond the high interest rate, we're happy enough with the loan. We've still got a few days to cancel, so I wanted to ask a question or two to the audience.

1. What is the difference between APR (17.068%) and the Contract Rate (17.24%)?

2. Why would the principal amount be smaller than the loan amount? Is it because they add the closing fees on top of the principal? I thought they would take the fees out of the principal?

3. The arbitration law seems to be completely in their favor - mentions of the customer having to pay their legal fees, etc. I was told we couldn't not agree to the arbitration clause, is that correct?

Thanks everyone, and have a wonderful weekend!

Damien

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The APR is the rate that takes into consideration all costs that are not part of the money for the loan, ie if you are "rolling in appraisal/closing costs etc" plus the actual interest rate. This does not pertain to your situation, but if you had Mortgage Insurance included it your payment, that is added into the figure also.

Yes, it is interesting to me that all of the verbage in a mortgage note is such that if you dont like it, then you dont sign the note and dont get the money. Can not negotiate any of that.

Charles

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