Annual Percentage Rate (APR) Explained
When the Consumer Credit Act (CCA) was introduced in the 1970s it included provision for what is called the Annual Percentage Rate, or APR. If you've seen any adverts for financial products, whether on television or in the printed media, then you will undoubtedly have seen mentions of APR.
The idea behind the APR is that it allows a potential customer to compare interest rates between financial products. The APR figure should take into account any charges to be paid as part of the borrowing.
The APR figure will not always be representative of what you actually pay. It might, for example, only be available to a certain profile of customers.
According to existing UK legislation, the APR figure quoted needs to be available to 66% of those applying for a particular financial product.
Finance Facts also offers information on loans and financial terms.
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