APR is just one of the many acronyms that come with the world of finance. It’s something everyone has seen on adverts and have heard about when looking into applying for credit cards or payday loans, but what exactly does it mean? Loanbird want to make getting the right option easier for you, so in this guide we’ll explain what it is, and why it’s important to understand it.
What is APR?
APR stands for Annual Percentage Rate and is used to measure both the interest rate and other charges which are applied to certain financial products such as bad credit loans, payday loans and mortgages. Simply put, it’s a representation of how much interest you’ll need to pay back on a yearly basis.
What’s a representative APR?
This is an advertised amount that a certain amount of customers will pay. It’s important to note that this rate must be offered to at least 51% of customers, which means that nearly half of applicants could be paying more than the representative APR advertised.
What’s personal APR?
This is the rate which takes the customer’s personal circumstances and amount the wish to borrow into consideration. This can only be calculated by using a full application from the potential customer.
Why do we need APR?
APR is an integral part of any lending service and anyone in the market for financial assistance. It makes the price of a loan transparent, making sure that comparisons are easily made when considering a product. In short, it makes things easier and puts the customer in control of getting the best option for them.
Why is my APR different to others?
Your APR is calculated using a myriad of variables and takes into consideration your borrowing and repayment history including credit cards and phone contracts.
What does this all mean?
APR is a great tool for comparing different loans against each other. However, it isn’t foolproof as sometimes there are costs which aren’t a mandatory part of the loan. The rate advertised isn’t always the one you’ll get as your circumstances are taken into consideration. At Loanbird, we put our customers first and aim to be as transparent as possible. So, if you’re looking for payday loans or any other financial product, please get in touch by clicking the ‘Apply Now’ button.