What is APR?

APR is an acronym for Annual Percentage Rate.

The APR of any given loan is the quickest and easiest way of comparing different loan quotation that you receive.

APR is difficult to calculate and understand how it is calculated because it is based on a complex mathematical equation, but what you must understand is that the APR is the cost of credit expressed in a yearly rate. The APR is calculated using the basic interest rate being charged, the term of the loan and also the frequency of the repayments.

Comparing the APR and the Interest Rate?

The APR is an artificial measurement of the cost of the loan that is available. There is bearing to the actual interest rate on offer, but the APR is calculated using the interest rate. Using the APR rate is the easiest way to compare loans because this reflects the actual cost of the loan as a yearly percentage.

As we have said previously, comparing the APR of loans is the quickest way to choose the best loan there are other factors that are important too. You should read any loan offer carefully and understand everything about it. If you do not feel comfortable with that then you should seek independent financial advice.