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CW Asset Finance | Vehicle & Equipment Finance Yorkshire

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How does APR differ from the interest rate?

The interest rate is the cost of borrowing the money itself. APR, the annual percentage rate, is a standardised figure that also folds in compulsory fees and reflects when payments fall due, so it is designed to let you compare products on a like-for-like basis.

Because APR includes charges the headline rate leaves out, it is usually the higher of the two figures. Two agreements can share an identical interest rate but carry very different APRs if one has an arrangement fee and the other does not.

Watch for flat rates as well. A flat rate is applied to the original amount borrowed for the whole term, even though your balance is reducing, so it looks lower than an equivalent rate charged on the reducing balance. It is not comparable to APR.

Some business lending is unregulated and may not be quoted with an APR at all. In those cases, ask for the total amount payable and the full fee schedule so you can compare offers on cost rather than presentation.

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CW Asset Finance is a credit broker, not a lender. Finance is subject to status and lender approval.