APR Calculator
Use this free APR calculator to find the true Annual Percentage Rate on any loan. Enter the loan amount, interest rate, fees, and term to see exactly what borrowing will cost you — not just the headline rate lenders advertise. Knowing the real APR is the only reliable way to compare loan offers side by side.
APR Calculator
How to Use the APR Calculator
- Enter your loan amount
- Enter the nominal interest rate (%)
- Enter any loan fees or arrangement charges (£)
- Enter the loan term in months
- Click Calculate to see your true APR instantly
What Is APR?
APR (Annual Percentage Rate) is the total yearly cost of borrowing, expressed as a percentage. Unlike the basic interest rate, APR includes the interest rate plus all additional fees and charges — giving you a complete picture of the real cost. UK lenders are legally required by the Financial Conduct Authority (FCA) to disclose APR, making it the standard metric for comparing loan offers accurately.
When comparing two loans, always use APR rather than the headline rate. A loan with a lower interest rate but high arrangement fees can actually cost you more than a loan with a slightly higher rate and no fees. Our APR calculator makes this comparison simple — and you can verify monthly repayments using our Loan Calculator.
APR vs Interest Rate — Key Differences
| Interest Rate | APR | |
|---|---|---|
| What it measures | Cost of borrowing the principal only | Total cost including all fees |
| Includes arrangement fees? | No | Yes |
| Includes broker fees? | No | Yes |
| Best used for | Calculating monthly payments | Comparing loan offers accurately |
| Which is higher? | Lower (fees excluded) | Higher (fees included) |
| Required by UK law? | No (optional) | Yes (FCA requirement) |
Real APR Calculation Examples
Here’s how fees can significantly change the APR on otherwise similar loans:
| Loan Amount | Interest Rate | Fees | Term | True APR | Extra Cost vs No Fees |
|---|---|---|---|---|---|
| £10,000 | 8% | £0 | 3 years | 8.0% | £0 |
| £10,000 | 8% | £250 | 3 years | 9.8% | +£250 |
| £10,000 | 8% | £500 | 3 years | 11.7% | +£500 |
| £5,000 | 6% | £200 | 2 years | 10.4% | +£200 |
| £20,000 | 5% | £400 | 5 years | 6.5% | +£400 |
Notice how a £500 fee on a £10,000 loan at 8% pushes the APR to nearly 12% — almost 50% higher than the advertised rate. This is why the APR is so important for honest loan comparison.
When APR Matters Most
- Personal loans: Different lenders charge wildly different fees — APR is the only fair comparison metric
- Credit cards: APR shows the true cost if you carry a balance month to month
- Mortgages: A lower rate with high arrangement fees can cost more than a slightly higher rate with no fees — especially on shorter mortgage terms
- Car finance: Dealers sometimes advertise 0% deals with high documentation fees — APR reveals the real cost
- Buy now pay later: Some BNPL products have very high APRs once the promotional period ends
What Is a Good APR in the UK?
APR benchmarks vary significantly by loan type. Here are typical ranges for UK borrowers with good credit in 2025:
| Loan Type | Good APR Range (2025) | Average APR | Poor Credit APR |
|---|---|---|---|
| Personal loan (£7,500–£15,000) | 6–8% | 9–12% | 20–40% |
| Personal loan (£1,000–£7,500) | 8–12% | 14–20% | 30–60% |
| Credit card (standard) | 20–25% | 28–35% | 40–60% |
| Mortgage | 3.5–5% | 4.5–6% | 6–8% |
| Car finance (PCP) | 5–9% | 10–15% | 20–35% |
How to Get a Lower APR
- Improve your credit score — The single biggest factor in the rate you’re offered. Pay bills on time, reduce credit utilisation, and avoid multiple applications in a short period
- Choose a larger loan amount — APR typically decreases as loan size increases, because fees represent a smaller percentage
- Opt for a shorter term — Shorter loans generally carry lower APRs, though monthly payments are higher
- Shop around — Use eligibility checkers that use soft searches to compare real offers without affecting your credit score
- Avoid unnecessary add-ons — Payment protection insurance and other add-ons dramatically inflate the effective APR
APR Calculator FAQ
What does representative APR mean?
Representative APR is the rate that at least 51% of accepted applicants receive. In practice, the rate you’re personally offered may be higher, especially if your credit score is below excellent. Always check the APR in your actual loan offer rather than relying on the advertised representative rate.
Is a lower APR always better?
Generally yes — a lower APR means lower total borrowing costs over the loan term. However, also consider flexibility features like overpayment allowances and early repayment charges, which aren’t captured in the APR figure.
Does APR include monthly payment amounts?
No — APR measures the annual cost of borrowing, not your monthly payment. To calculate exact monthly payments, use our Loan Calculator which shows full amortisation breakdowns.
Why is my APR much higher than my interest rate?
Because APR includes all fees on top of the interest rate. The larger your fees relative to your loan amount, and the shorter your term, the bigger the gap between your nominal rate and APR. A £500 fee on a £2,000 loan has far more APR impact than the same fee on a £20,000 loan.
Is APR the same as EAR?
No — EAR (Effective Annual Rate) accounts for compound interest within the year, while APR is calculated on a simple interest basis. For savings accounts and credit cards where interest compounds monthly, EAR gives a more accurate picture. For most loans with monthly repayments, APR is the standard comparison metric.
Related Calculators
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- Interest Calculator — Calculate simple and compound interest on loans or savings
- Compound Interest Calculator — See how investment returns compound over time
- Savings Calculator — Compare borrowing cost against savings return