What is APR?

APR stands for Annual Percentage Rate. APR shows you how much it will cost you to borrow a loan for a year and is expressed as a percentage, allowing you to compare interest and fees between the different loan lenders. APR is normally attached to any type of credit that you have taken out such as a payday loan or a short term loan.

The APR is what tells you how much interest you will be paying on top of your loan. In this guide, you are going to learn about how APR works and in what situations APR will be applied. The point is to empower you so that you take control of your personal finances without getting bitten by APR. In the UK, APR is a legal requirement that must be shown on all loans clearly so that consumers know what they are getting into.

In a nutshell, APR is the cost of borrowing which you must pay on top of the loan itself.  As a responsible lender, Peachy Loans shows its APR rate on the cash loans it offers. This is Peachy’s current APR:

Representative example: Borrow £400 for 6 months. Total repayment: £750.75 in 6 monthly payments of £125.13.
Interest p.a: 259.33% (fixed). Representative 947%APR.


What does representative APR mean?

  • Where credit cards or loans use a representative APR, this means 51% of successful applicants will be given the stated interest rate.
  • If a loan is advertised as being 7% representative APR, this means 51% of accepted applicants have to get 7% as their rate. The other 49% could get a different rate.

How do lenders like Peachy decide how to charge APR?

Peachy charges on APR based on several factors such as how long they intend to lend the money to you for and who is going to be borrowing as well. The most important thing you can do is make sure that you read the APR and work it out so you know how much you will be paying back.  Lenders such as Peachy also base APR decisions based on who their target customer is.

APR Example

One of the best ways to see APR at work is through an example. If you borrow £2,000 with 7% APR across one year and assuming that you pay your interest in monthly instalments; this means that you will pay £140 in annual interest. It’s critical to understand how much you will be paying back before you take out a loan. You need to match up your current financial circumstances alongside the APR of your loan to understand how much cash you need to put aside for your loan.

Peachy loans APR

What is variable APR?

It’s vital to note that some APRs are not fixed which means that your APR can go up at any given time. Variable APRs are popular with products such as credit cards. This is why if you need credit just for a short-term need, it is better to go with Peachy because the APR is not variable; it is exactly what is written in your agreement.

Is it easy to find low APR options?

Many people with poor credit are looking for low APR choices when it comes to loans and credit. If you are looking for low APR options, you should be aware that if your credit hasn’t improved, it is difficult to get an APR that’s ideal for your lifestyle. You need to improve your personal finances in order to be considered for low APR. One thing you can do to is improve your credit score by having a credit history where you take out loans and repay them on time.

The good thing about payday loans from Peachy is that the APR is broken into chunks that make the minimum repayments affordable for people who are working.

Does Peachy write the APR clearly of its loans?

Yes – Peachy is a responsible lender so the company is committed to giving borrowers all of the information they require about their loan. To go even further for borrowers, Peachy’s website displays a repayment calculator that will show you how much you need to repay on your loan. This is much easier to understand than simply a percentage which can be confusing. We know that it’s not easy for everyone to work out complicated APR numbers on the spot which is why this calculator has come in handy for a lot of our customers.

Dos & Don’ts of Payday Loan Borrowing

  • Do use a calculator to work out how much interest you will be paying based off the APR on your loan
  • Don’t choose payday loans if you do not have regular income
  • Do always tell the truth on your loan applications to avoid financial hardship
  • Do have some savings so you can take advantage of Annual Equivalent Rate – AER
  • Don’t apply for multiple short term loans at the same time with different lenders
  • Do understand APR terms such as p.a which stands for per annum (per year)

APR is one of the most important aspects of your payday loan that you need to understand. With this detailed explanation, you should be able to understand how APR will affect your application with Peachy Loans.