Understanding the interest rates and the Annual Percentage Rate (APR) of a loan, and eligibility criteria is crucial when considering your options. Here's a detailed guide to help you navigate these aspects.
What’s the difference between an interest rate and an APR?
These are both essential metrics when it comes to borrowing money, but they serve different purposes:
Interest Rate: This is the percentage of the loan amount you pay as interest every year. For example, if you borrow $1,000 with a 5% interest rate, you will pay approximately $50 in interest over a year. It reflects the cost of borrowing the principal amount.
APR (Annual Percentage Rate): Your APR includes your interest rate, but it also includes other fees, such as the origination fee Fortify charges. The APR provides you with a more comprehensive view of the total cost of borrowing your tuition, incorporating both interest and any additional fees.
While the interest rate tells you how much you'll pay each month in interest on your final loan amount, the APR gives you a fuller picture of the overall cost of your loan, including all associated fees.
Typical interest rates offered by Fortify
We’re committed to providing fair and transparent pricing. Our interest rates are designed to be affordable and predictable, ensuring that you can easily manage your repayments.
Our interest rates are fixed and start as low as 6.99%, and they remain at or below 9.99%. These fixed rates mean your monthly payments do not change, providing you with stability and predictability.
Our APRs (annual percentage rates) range from 7.99% to 27.99%, and they include the total cost of the loan, including interest and any fees. We strive to keep our APRs as low as possible and to offer fair, clear, and competitive rates.
What determines my interest rate?
Several factors will influence the precise interest rate you receive from Fortify:
Your state of residence: Different states have varying lending regulations that can impact your final interest rate.
School or program: The career you are pursuing or the program you’re attending may affect your final interest rate, possibly reflecting the income potential associated with your field.
Loan term length: The duration of your loan term can influence the rate, with longer terms potentially having different rates than shorter ones.
Loan amount requested: The total amount you wish to borrow can also impact your interest rate.
Lending laws and regulations: Federal and state lending laws and regulations will affect the terms and rates offered.
How does Fortify calculate interest on my loan?
Your interest accrues daily based on the fixed interest rate provided in the Final Disclosure Statement when you sign your loan agreement.
Here's a simple example. Let's say that you have a $10,000 loan amount, with a fixed interest rate of 8% annually.
To calculate the interest added to your loan each day, you would first divide your annual interest rate by 365 days. So, 8% divided by 365 is approximately 0.022%. Then, if your loan balance is $10,000, the interest added each day would be 0.022% of $10,000, or around $2.20.
If you make payments and reduce your loan balance, then your interest would go down as well. Let’s say that after making some payments, your remaining loan balance is now only $9,000. This means that each day, the interest added would now only be 0.022% of $9,000, or $1.98 per day. As you pay off more of your loan, over time the interest added each day will go down as well.
Please note that if you don’t make payments, your unpaid interest might be capitalized into the loan amount under certain circumstances. When unpaid interest is capitalized, it means that it’s added to the loan balance, so in the future, you’ll now owe interest on that unpaid interest as well as on the original loan balance. For more details on when and if unpaid interest might capitalize into your loan, please review your Fortify loan agreement in detail.
Summary
If you have any further questions or need clarification, please reach out to Fortify’s customer support team and we’ll be happy to help.