Annual Percentage Rate

APR stands for Annual Percentage Rate and is a great way to compare the cost of a loan per year. It is the annual rate charged for borrowing money including any additional fees or charges.

APR is used in the UK to help increase transparency when it comes to the cost of credit and are a required to be present on any type of financial advertisement.

(1) A rate of interest for the purpose of CONC 3.5.3R (1) is not limited to an annual rate of interest but would include a monthly or daily rate or an APR. It would also include reference to 0% credit (but where the APR is 0% and CONC 3.5.3R(2A) applies, a representative example is not required). An amount relating to the cost of credit would include the amount of any fee or charge, or any repayment of credit (where it includes interest or other charges).

Source: FCA Handbook, CONC 3.5,

How is APR Calculated?

APR is calculated using the following equation:

Calculate APR


Representative APR

A representative APR isthe typical APR that over 51% of customers will get when applying for a finance product. A representative APR may be different for different loan terms and loan amounts. The actual APR you get will be based off your personal circumstances like credit history and age.

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