APR stands for annual percentage rate. It exists so that two borrowing offers with different fees and different schedules can be laid side by side and compared with one figure.
It is the yearly cost of borrowing as a percentage, with the compulsory fees folded in. A loan at 9 percent with a large arrangement fee can carry a higher APR than one at 10 percent with no fee, and the APR is what says so.
Two traps. The first is that an advertised APR is usually the one offered to people with the strongest borrowing record. Others are offered more. The advertised figure is a starting point, not a quote.
The second is that APR assumes the borrowing runs its stated course. Repay early, repay late, or use a card differently from the pattern baked into the figure, and the real cost moves away from it.
APR is a way to compare. It is not a prediction of what you will pay.
For anything on a fixed schedule the more useful figure is the total amount repayable: what leaves the account over the whole term, in money rather than percent. Borrow $5,000 over three years and the gap between two offers can be a couple of percent on paper and $300 in the account.
For open-ended borrowing like a card, neither figure is really the point. What matters is how long a balance is carried, because the cost is the rate multiplied by time, and time is the part in your hands.
What has to be disclosed, and how it must be worded, differs from country to country. The arithmetic underneath does not.
General information about how money works, not advice. What is right for you depends on your own situation, and a licensed professional can look at that with you.
Peeka carries this piece too, under Insights and Learn, with the examples in your own currency. Read it in the appGet the app
