APR stands for Annual Percentage Rate. It is a standard, regulated way of expressing the total yearly cost of borrowing as a single percentage. You will see it on your credit agreement, on the pre-contract information we give before you sign, and on any quote or illustration. UK consumer-credit rules require it to be shown in a consistent way so customers can compare loans like for like.
What goes into the figure
APR is more than just the interest rate. It rolls in:
- the interest charged on the loan;
- any compulsory fees you have to pay for the credit (where these apply);
- the timing of your payments — the same interest rate paid over a longer term produces a different APR than over a shorter one.
Because it bundles those things together, APR is a useful headline number when shopping around. It is not the only number that matters: the total amount payable, the monthly payment, and the term are equally important and appear alongside it on your agreement.
Representative vs personal APR
Adverts often quote a “representative APR”. That is the rate offered to at least 51% of customers accepted on the advertised product — it is illustrative, not personal. Your individual APR is shown on the pre-contract information for your specific application and may be different from the headline.
How we calculate yours
The APR on your loan reflects the rate and fee structure that applied to your application, calculated using the standard formula set by UK consumer-credit law. If you would like to see exactly how it was worked out, please ask — we are happy to walk through the figures with you on the phone or by email. Your credit agreement shows the rate, the total payable and the schedule that produces the APR shown.
When APR can change
For a fixed-rate loan, the APR shown on your agreement is the APR for the life of your loan — it does not change month to month. If the terms of your loan are ever varied (for example a hardship variation that extends the term), we will reissue the relevant disclosures so the new total cost is clear before anything is agreed.
If anything about the APR or your overall cost of credit is unclear, please contact us — we would always rather explain than leave you guessing.
Still need help with this?
If this article has not answered your question, you can send us a request using one of our online forms, visit the Support page, or email us at support@credicorp.co.uk.