What is APR

What is APR?

APR, or Annual Percentage Rate, to give it its full title, is a percentage of the amount that you borrow as a loan. You then pay back this amount as well as the original sum of your loan for the set amount of time that you take out your loan. For example, if you take out a loan with an APR of 10% you will pay 10% of the total of your loan in interest payments each year. The APR of a loan is a good way to measure how much it will cost you as a lending service, as it takes into account all charges throughout the course of the loan.


How do I find out the APR of my loan?

All lenders are obliged to quote their APR so you can compare the rates. Each company will differ depending on the type of lending, and the APR for each one may be different. You can find out the APR on your lender’s website and use it to help you work out your finances so that you are sure you can afford the repayments. 


Why are the APR rates so high?

The APR of short term payday loans is so high because of the short repayments system-if the APR was the same as a loan taken out over several years, the lenders would make no money. These loans are also considered to be a higher risk for the lender than any other type of loan, such as a credit card or an overdraft, so they do what they can to ensure that they get back what they lent you. It’s only fair, when you think about it!

APR can be confusing for short term loans as you will repay it far quicker than yearly loans. You don’t really end up paying 1750% of what you borrowed-but this may help you to figure out how much you would be paying if your loan went on for years (hence giving you all the more encouragement to repay it quickly!) The APR system is difficult to apply to short term loans (like payday loans) because these loans are designed to be an extremely short term loan and are spread out over weeks or months rather than years. This makes the APR for these loans look ludicrously high-but in reality you still end up paying back only about 25% of what you borrowed on top of the original sum.


Short Term Borrowing

Payday loans are intended to be applied for, taken out and repaid within a very short space of time. This makes them unsuitable for long term financial difficulties, although they can really help out and give you some breathing space in the short term. 

As a form of borrowing, payday loans are an expensive option, however they make up for this by being extremely convenient and easy to apply for and are fast to offer approval so that you can quickly and efficiently deal with any financial emergency.



Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

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APR Explained

Representative 277.6% APR

  • Representative Example:
  • Amount of credit: £850 for 11 months at £146.30 per month. Total repayment of £1,609.25. Interest: £759.25. Interest rate: 150% pa (fixed). 277.6% APR Representative. APR rates range from 45.3% APR to 1575% Max APR
  • Your APR rate will be based on your circumstances.
  • Rates from 45.3% APR to 1575% APR - we provide a no obligation quote; your APR will be based on your personal circumstances.