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34.9% APR Representative (variable)
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Annual percentage rate

There are quite a few confusing financial terms, but APR is one of the most difficult to get to grips with. It’s also one of the most important terms in lending to understand.

APR is commonly used in relation to borrowing, so you’ll probably see it being used by loan and credit card providers.

In this guide we’ll explore everything you need to know about APR, from what it means to how it’s used by lenders. 

“It might also include the arrangement fee...”

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What does APR mean?

To begin with, APR is an abbreviation of Annual Percentage Rate. It is the cost of borrowing from a lender and can sometimes include the interest and any other fees and charges you’ll have to pay, rather than just the interest rate alone. For example, it might also include the arrangement fee.

Lenders have a legal duty to share the APR of a product with you. This allows you to not only work out what the repayments on the borrowing will be and if you can afford them, but also to compare the cost of different credit cards, loans and other forms of credit.

If you see an advertised interest rate of, say, 10%, but an APR of 15%, this might initially confuse you. Put simply, this 5% difference is due to the charges that have been added into the calculation. As both the interest rate and any fees you’re required to pay are already included, it lets you easily compare the full cost of borrowing between lenders.

Before they lend you anything, your credit provider must tell you the APR that you qualify for so you can compare it to what other lenders are offering and make sure you’re getting the best deal for you. 

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What does Representative APR mean?

Just by adding one word to the mix –‘representative’ - the term can become trickier to get to grips with. But it doesn’t have to be, and that’s why we’ve set out to explain Representative APR to you in the simplest way possible so you really know what to expect.

Representative APR is the rate that the majority of accepted customers - at least 51% - will receive.

To break it down, this means that just over half of all the customers  accepted for a particular credit card or loan will be charged the advertised percentage rate of interest. For example, if a lender advertised a credit card with 36% Representative APR, this simply means that just over half of all the customers who apply and are accepted will pay this.

The other 49% of accepted customers may receive a different rate based on their individual credit history. 

Thirsty for more? Read part 2 of our APR guide here.

Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds

34.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender

Check Now