APR stands for the Annual Percentage Rate of
charge. You can use it to compare different credit and loan offers. The APR includes
important factors such as:
the interest rate you must
how you repay the loan; the length of the loan agreement (or
term); frequency and timing of instalment payments; and amount of each
certain fees associated with the loan;
premiums for payment protection insurance that the lender
chooses to make compulsory.
All lenders have to tell you what their APR is before you sign an agreement. It will
vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are
thinking about borrowing, shop around.
If you borrow £1,000 for one year at 20% interest, and at the end of the year you repay
a lump sum of £1,200:
you will be paying an interest rate of 20%;
the APR will also be
If you borrow £1,000 for one year at 20% interest, and pay throughout the year in equal
monthly instalments (12 x £100 = £1,200),
you will still be paying an interest rate of 20%;
the APR, however, will be roughly
Example 2 is more expensive because you are paying back the £1,000 gradually throughout
the year. In Example 1 you have the benefit of being able to access the £1,200 for the whole year, which
you could invest and earn interest on. By paying in instalments you're losing out; this increases the
cost of the loan - hence the higher APR.
Questions to ask the lender
If you find a deal with a low APR, ask the lender the following
Does the interest
included in the APR vary, or is the rate fixed?
rate is variable, your repayments could go up or go down. If the rate is fixed, your repayments will stay
Are there any
charges that are not included in the APR?
include charges for services such as optional payment protection insurance. If so, make sure you
what the charges
whether you really need the services
how much you would have to pay;
when you would have to
What are the
conditions of the loan or credit and do they suit you?
example, do you have a choice about how and where you make the repayments? If you suddenly have spare
money, can you pay the loan off early - without penalties?
Can you afford
the monthly payments?
A more expensive loan (with a higher
APR) could have lower monthly payments if they are spread out over a longer
period of time. That might suit you better if your budget is tight, even though you would pay more in the
What does Kilrea & District No.5 Credit Union Ltd offer you, the
Our APR is
There are no
hidden charges with our APR
Our loans can be
paid directly over the counter or via a Standing Order arrangement with your bank. We never
charge any fee for early payment of a loan, but the borrower saves on interest
Our APR is
12.68% which is equivalent to about
£64 on a £1000 loan paid over a period of 1
monthly/weekly payments are agreed at the outset so that
the loan is comfortably re-payable. Any member getting into difficulties is advised to discuss the matter
with the CU loans officer to organise a re-structured arrangement. This is good for the member’s state of
mind and helps the Credit Union plan for the future.