Skip to main content

Annual Percentage Rate of Charge - APR | Debt Consolidation LoansThe APR Explained

The purpose of APR (Annual Percentage Rate of charge) is to make it easier for the consumer to compare deals like for like and it is used on lending such as loans, credit cards and mortgages.  Introduced by the Consumer Credit Act 1974, it shows the total cost of borrowing over the period of a year and, as well as interest, the figure includes upfront fees and charges. The APR calculation itself is complex and even those who understand the mathematics of finance sometimes struggle with it.

When comparing debt consolidation loans or any form of credit, you should not rely on the APR alone, unless the loan term and amount are exactly the same – APR is dependent on the time period for which the loan is calculated, so the APR for a loan with a 20-year term cannot be compared to the APR for a loan with a 15-year term.

Choosing an APR

However, when choosing a loan, the APR can be useful information to take into account alongside the monthly repayment, the total amount which will be paid back, and the length of the loan.

Before the borrower signs the credit agreement, the lender must tell them the APR they are being charged, which may be different from the advertised rate, or representative APR.  The rate offered to each individual is dependent on a number of factors, and some people may be refused credit altogether.

Debt Consolidation Loans are a UK based Debt Consolidation Loans Broker, We can help with any form of Debt Consolidation you may need.

Visitors also read:

Advantages and Disadvantages of Consolidating Business DebtCredit cards
May 16, 2020

The dangers of credit card debt

Illustration of a man in debt The dangers of credit card debt Credit card debt is one of the most common causes of stress for people all over the UK, as…
Avoid a financial ticking time bomb | Debt Consolidation LoansGuides
September 11, 2015

Avoid a financial ticking time bomb

Avoid a financial ticking time bomb We’re all occasionally guilty of focusing too much on the here and now, and not looking at the longer term consequences of things, and this…
Barclays Bank are FinedPersonal Finance
December 16, 2020

Barclays Bank are Fined £26million Over Treatment of Customers Dealing with Debt

News just out that Barclays Bank have received incredible consequences over their treatment of customers is delighting many people that have and still are struggling with debt. In a first…
A male coworker gives advice to a female colleague about Royal Bank of Scotland debt consolidation loansDebt Consolidation
September 15, 2020

How important is it to get debt consolidation loan advice before applying

Debt consolidation loans are an invaluable way for you to help get yourself out of debt. With a range of loans all needing repayment, the easiest thing to do is…
My In-Game Buying Secret – Debt Due to Mobile Gaming Apps | Debt Consolidation LoansDebtGuides
February 25, 2021

My In-Game Buying Secret – Debt Due to Mobile Gaming Apps

Debt Due to Mobile Gaming Apps When you think of getting into debt, a lot of people automatically go to overspending on lavish holidays, furnishings and cars. However, debt can…
Advantages and Disadvantages of Consolidating Business DebtDebt Consolidation
May 1, 2020

A quick guide to spotting debt consolidation scams

A quick guide to spotting debt consolidation scams We have spoken on our blog often about exactly what the benefits of debt consolidation are, how you can get a better…

Leave a Reply

twelve + 18 =