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The nominal interest rate is simply the percentage charged on the principal. The APR includes all mandatory fees — origination fees, processing charges, insurance premiums — as a single annualized cost. APR is always equal to or higher than the nominal rate.

For a $300,000 mortgage at 6.0% nominal with 1 origination point: APR rises to ~6.14%. For payday loans advertising 10% monthly, the true APR exceeds 260%. Always compare loans using APR — never the nominal rate alone.

Indicative ranges, central bank data, March 2026. Verify before any financial decision.

A credit score numerically represents your statistical likelihood of repaying debt. In the US, FICO Scores range 300–850. Borrowers above 720 pay 7–9% APR on personal loans; those below 560 face 28–36%+ or rejection. In the UK, Experian uses 0–999. In India, CIBIL ranges 300–900.

• FICO 720–850: Excellent — best rates and highest limits
• FICO 690–719: Good — competitive rates, minor restrictions
• FICO 630–689: Fair — above-average rates
• FICO 580–629: Poor — high-interest products
• Below 580: Specialist lenders only

FICO factors: Payment History (35%), Utilization (30%), Length (15%), Mix (10%), New Credit (10%). One 30-day late payment can drop an excellent score by 60–110 points.

Credit utilization is the fastest factor you can change — recalculated every billing cycle. Below 10% is optimal. For a $5,000 limit, keeping balance below $500 measurably improves your score within 30–60 days.

• Pay all bills on time — automate this without exception
• Keep utilization below 30% (ideally below 10%)
• Do not close old credit cards — history length matters
• Dispute errors immediately — errors affect ~20% of reports

Trap #1: The Teaser Rate. 0% introductory rates revert to high standard rates — sometimes with deferred interest applied retroactively.

Trap #2: Dealer Markup. Dealerships mark up auto loan rates 1–3% above the lender's buy rate. On $30,000 over 60 months, a 2% markup costs $1,600+ extra.

Trap #3: Payment Shock on ARMs. Always model your payment at the maximum possible rate, not the initial rate.

Trap #4: Prepayment Penalties. Some loans charge 2–6 months of interest for early repayment.

Payday lenders charge $15–$30 per $100 for two weeks — APRs of 390%–780%. CFPB: 80% of payday loans are rolled over within 14 days, creating systematic debt traps.

• Pressure to decide immediately — prevents comparison shopping
• "No credit check" — compensated with extremely high rates
• Terms in weekly/monthly payments rather than APR
• Mandatory undisclosed insurance products
• Balloon payments — small regular payments then massive lump sum
• Negative amortization — balance grows, not shrinks

Principle 1: Total Cost, Not Monthly Payment. A $400,000 mortgage at 6.5%: 30-year total cost ≈ $908,000 vs. 15-year ≈ $627,000. The 30-year option costs $281,000 more for the same house.

Principle 2: Comparison Shopping. A 0.5% rate difference on a $400,000 mortgage saves $58,000 over 30 years. Always get 3+ quotes.

Principle 3: DTI Management. Most lenders prefer DTI below 36%. Calculating and optimizing yours before every major loan application improves both approval odds and rates.

At GLA, we include this because we have no incentive to encourage borrowing. Our only interest is your long-term financial health.

Don't borrow to finance depreciating consumer goods if you can save first. Borrowing at 22% APR to buy a $1,500 phone means it costs $1,776 — and by the time you finish paying, it's worth $300.

Emergency fund first. 3–6 months of essential expenses in liquid savings is the most powerful protection against being forced into predatory lending during a crisis.