Lenders in United Kingdom advertise a headline or nominal rate because it is a short number. The figure the local rules treat as the yearly cost of credit is APR. It folds in compulsory fees. That is the number to sort by if you care about what you pay, not what the advert leads with.
What usually sits inside APR
- Interest, expressed as a yearly rate.
- Arrangement or set-up fees that you must pay to take the loan.
- Compulsory monthly or invoice fees.
Optional insurance and fees you can decline are often outside it. Read the fee line on the card. Two loans with the same headline rate can have different APR if one charges a large set-up fee.
Term still matters
APR is a yearly measure. Stretching the term can leave APR similar and still increase the interest you pay in total. Put the same amount and term into the loan calculator, then compare live offers on personal loans.
Next: how Bankmatch compares loans and when consolidation pays. Providers on those pages are supervised by the FCA and the PRA.
Written for readers in United Kingdom. Bankmatch is paid by providers and never by readers; that does not change what we write.