APR, the annual percentage rate, is the one number that lets you compare two finance offers fairly. It adds the interest and the compulsory fees together and spreads them over a year, so a cheap-looking monthly payment cannot hide an expensive agreement.
What the rate includes
The APR has to include every cost you cannot avoid to get the credit: the interest itself, arrangement fees and any other compulsory charge. It leaves out the extras you choose, such as optional insurance, so ask for those on a separate line.
How to compare two offers
- The APR, and whether the rate is fixed for the whole term
- The total amount payable, not just the monthly payment
- The length of the agreement in months
- The deposit, and whether your part exchange counts towards it
- Any charge for settling early
A longer term lowers the monthly payment but raises the total. Borrowing €24,000 at a 6.9% fixed rate (7.1% APR) costs about €2,640 in interest over 36 months and about €4,450 over 60 months.
Our representative example is a 6.9% fixed rate, 7.1% APR representative. The two differ because the fixed rate is charged a twelfth at a time, month by month, while the APR shows what that comes to over a full year, together with any compulsory fees. Your own rate depends on the lender and on your circumstances, and we always show it to you in writing before you sign. Talk to our finance team if anything on the page is not clear.