What APR actually means

APR stands for Annual Percentage Rate. It exists so that two credit products can be compared on one number instead of on a page of terms each, and it is genuinely useful for that — as long as you know what it does not cover.

What the number includes

APR folds together the interest rate and the compulsory fees attached to the borrowing, then expresses the whole thing as a yearly percentage. Because the fees are inside it, a loan advertising a low interest rate and a large arrangement fee will show an APR noticeably higher than its headline rate.

What it leaves out

• Optional charges. Anything you can avoid — late payment fees, charges for paper statements — sits outside the calculation.
• How long you borrow for. APR is annualised. Spreading a smaller APR over five years can cost more in total than a larger one over two.
• What happens after an introductory period. A rate that changes later may be represented as a representative figure rather than the one you will actually pay throughout.

Representative APR is not your APR

Advertised rates are usually representative, which means the lender expects to offer that rate to a proportion of successful applicants — commonly just over half. The rate offered to you personally depends on the lender's own assessment, and it can be higher than the one in the advertisement.

Reading two offers side by side

Compare the total amount repayable, not only the APR. The total repayable answers the question you actually have, which is how much of your money ends up with the lender by the end.

Where Finzla fits

Finzla explains terms like this one in plain language and shows you what your existing commitments are costing you across the accounts you connect. It does not rank credit products, assess your eligibility for any of them, or recommend one over another — those are decisions for you, and if your situation calls for regulated advice, seek it independently.