APR (Annual Percentage Rate)

The Annual Percentage Rate represents the total yearly cost of borrowing, expressed as a percentage of the loan amount. It includes not only the interest charged on the debt but also any compulsory fees or charges (such as arrangement or admin fees).

In simple terms, APR shows the “true cost” of credit, allowing borrowers to compare different finance products on a like-for-like basis.

Example:

A loan with 8% interest and a £100 fee on a £1,000 advance would have an APR higher than 8%, as it factors in that fee over the term.

Used in:

Loans, credit cards, asset finance, and other regulated credit products.