A variable interest rate, on the other hand, can vary during your loan lifetime. That is because variable interest rates are tied to an index rate, and if such index rate changes, so does your interest rate.
How Lenders Calculate the Interest Rate
Lenders calculate your interest rate using your data. Every lender has its formula to calculate the interest rate, and so you will most likely get five different rates from five lenders.
How Lenders Calculate the APR
Things are a little different when it comes to APR, and unfortunately, you have less control over it, as your lender controls all of the fees that, along with your interest rate, make up your APR.
For this reason, it is always important to consider both the interest rate and APR of the loan. As part of this equation, knowing or estimating whether you will repay the loan sooner or not makes a difference.