ChatterBank2 mins ago
a.p.r.
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What..in laymans terms is it ?and how do you work it out...thanks
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In short, it's the Annual Percentage Rate that you are charged on borrowings/credit card purchases etc.
If a credit card charge is 1% per month, the APR will be more than12% because ofthe effect of compound interest - i.e. paying interest on the interest.
I don't know the formula for working it out, but credit providers have to let you know what the APR is.
One other comment is that the lowest APR is not always the cheapest option for a loan, where you should also look at the total amount repayable.
If a credit card charge is 1% per month, the APR will be more than12% because ofthe effect of compound interest - i.e. paying interest on the interest.
I don't know the formula for working it out, but credit providers have to let you know what the APR is.
One other comment is that the lowest APR is not always the cheapest option for a loan, where you should also look at the total amount repayable.
The APR was originally intended to level the playing field when it came to quoting cost for loans etc. Lenders have to include all costs relevant to the loan so they also add in things like loan protection insurance and arrangement fees. Unfortunately this served to confuse rather than clarify. It also sought to resolve the annual amoun of interest when charged monthly so in the example above 1% per month is 12.6825% per year.
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