Annual Percentage Rate

What is the APR?

The APR stands for the annual percentage rate of charge. The APR represents the interest and fees used to repay a loan. It is calculated on an annualised basis which is based on a complex formula in accordance with the Financial Conduct Authority regulations and the Consumer Credit (Total Charge for Credit) Regulations 2010. The APR is intended to help consumers compare credit agreements.

The APR formula includes several important factors such as:

  • the interest rate you must pay;
  • the length of the loan agreement (or term);
  • frequency and timing of each payment;
  • certain fees associated with the loan.

The APR works best if you are comparing similar types of credit, over similar periods. Here is a handy Peachy Loan chart to compare different loan amounts and period. As well as the APR, you should also look at the total amount payable and check that you can afford the repayments.

What is APR

Why is the short term loan APR so high?

According to the law, all short term lenders, all lenders for that matter, are legally required to quote the APR of any loan product they may offer to consumers. As such, the short term loan is measured by a tool that is applied to all loan products in the market, including those that are of a longer duration than a payday loan. When applying for a short term loan you are seeking credit to be taken over a short term, normally until your next payday, you are not seeking credit to be repaid over a year. As such, while the APR is a useful way to measure like-for-like term products of similar duration when it comes to short term loans the APR alone is not necessarily the best tool for determining the true cost of a loan.

What is the representative APR?

This is the average APR of all the credit agreements that are entered by the majority of consumers from our advertising on this website. A representative APR will be displayed within the Representative Example to help you compare other similar credit products offered by other lenders.

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