Discount points
Paying upfront cash to lower your interest rate.
One point = 1% of the loan amount and typically lowers your rate by 0.25%. Worth it if you keep the loan long enough to break even. Calculate the break-even by dividing the upfront cost by the monthly savings.
Related
- APR (Annual Percentage Rate) — The true yearly cost of borrowing — interest plus most fees.
- Interest rate — The percentage charged annually for borrowing money.