APR Calculator – True Annual Cost
The APR (Annual Percentage Rate) includes the interest plus fees, so you can compare loans fairly. Work out the true annual cost of any loan below.
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What representative APR means
The APR (Annual Percentage Rate) rolls the interest and any compulsory fees into a single yearly percentage, so you can compare loans on a level footing. The representative APR is the rate offered to at least 51% of accepted applicants – your personal rate may differ.
Because it includes fees, the APR is usually higher than the headline (nominal) interest rate. Two loans with the same nominal rate can have very different APRs once arrangement and account fees are counted.
Why compare by APR
A loan with a low nominal rate but a large arrangement fee can cost more than one with a slightly higher rate and no fee. Comparing the APR – or better still the total amount repayable – prevents you being caught out by fees hidden behind an attractive headline rate. For very short-term or high-cost credit the APR can look enormous, which is exactly why the figure is required by law.
Frequently asked questions – APR Calculator – True Annual Cost
The APR includes compulsory fees (such as an arrangement fee) as well as the interest, so it reflects the true annual cost. The nominal interest rate ignores fees, which is why the APR is usually higher.
It's the APR that at least 51% of accepted borrowers receive for a given product. Lenders must advertise it, but your own rate can be higher depending on your credit history and the amount and term you choose.
Usually, for the same amount and term, a lower APR means a cheaper loan. But always check the total amount repayable too, as term length and fees affect the overall cost.