APR = Annual Percentage Rate. In other words, it defines how much interest you will pay every year on a debt.

By law, prior to you taking out any sort of loan/borrowing - the company you are borrowing from must tell you what the APR on the loan will be. As a general rule of thumb, the lower an APR is, the cheaper the loan will be for you. Therefore use this when shopping around for a loan.

When you find a good deal, there are a few questions you need to ask:

Is the APR fixed or variable? What this means is - if the APR is variable, your payments could change in the future.


Are there any hidden charges?

For example, can you pay off the debt early without any penalties?

For a calculator to assist you in working out how much borrowing different amounts of money at different APRs - visit The Office of Fair Trading (OFT) website at www.oft.gov.uk