PF
Pennywise Finance Editorial
Uses the standard IRR-based APR calculation (bisection search for the periodic rate that balances cash flows).
Fact-checked
Reviewed September 2026
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APR (representative)—
Total interest—
Total repaid—
Monthly interest rate—

APR vs interest rate

The headline interest rate (nominal) is the pure cost of money. APR adds compulsory fees and expresses the whole package as an annualised figure. UK lenders must quote representative APR — the rate at least 51% of successful applicants get.

What APR includes

APR excludes: optional insurance, late fees, early repayment charges, and third-party fees (e.g., solicitor on a mortgage).

Comparing loans using APR

Lower APR always = cheaper borrowing when term is the same. But a 60-month 7% loan can total more interest than a 36-month 9% loan despite the lower APR. Always check both APR AND total repayable.

Frequently asked questions

What is "representative" APR?

The APR offered to at least 51% of successful applicants. Your personal APR may be higher based on credit score.

Is 0% APR really 0%?

0% purchase or balance transfer cards offer a limited window with no interest. Fees (balance transfer fee ~3%) still count towards your overall cost.

Why does my APR differ from the quote?

UK lenders assess based on your credit profile. The displayed representative APR is only guaranteed for the top-tier applicants.

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Illustrative calculation. Not personalised financial advice. Rates, bands and allowances for the 2026/27 UK tax year, verified against gov.uk at time of review. For regulated advice consult an FCA-authorised adviser.