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Representative Example

Loan Amount (for 4 months)
Three Repayments of
One Final Repayment of
Total Repayment
Interest Rate
292% pa (fixed)
1244.0% APR

Comparing a financial product such as a payday loan or a credit card? Then there’s a chance you might have come across terms that aren’t always easy to understand.

One of these more common terms that can often leave people confused is APR, otherwise known as Annual Percentage Rate. So to help, we’ve put together this guide to give you a clearer understanding of what you need to know about APR.

APR Meaning

Intended to give a clearer overview of the cost of borrowing for a year, APR is a measure of the charges expressed as a percentage involved with a financial product. This includes everything you are required to pay over the year including the standard fees and interest.

It’s important, however, to note that the APR doesn’t include costs such as voluntary payment protection insurance or penalty charges like late fees.

How is APR Calculated?

If you are looking at different loans or credit cards, comparing their APR on a like for like basis is a helpful way of understanding what the cost may be to you in the long run. To calculate the APR, the following are all taken into account:

  • Interest rate applying to the agreement
  • Initial fees (such as borrowing fees)
  • Principal sum borrowed
  • Loan Term

Annual Percentage Rate. APR. Loan, mortgage loan and finance term

What’s the Difference Between Representative APR and Actual APR?

When it comes to APR, there are two types generally referred to; representative APR and the APR applying to an agreement.

  • Representative APR is the rate advertised by lenders presented in a standard way and the first rate that customers often see. At least 51% of customers receive a rate that is the same as, or lower than the representative APR and not everyone within 51% will necessarily get the same rate.
  • APR is the actual annual rate applying to an agreement once all customer’s current circumstances and other factors such as their credit history have been taken into account. The actual APR will only be presented to a customer once they have applied for the financial product. The APR the customer receives could be the same, higher, or lower than the Representative APR.

What is APRC?

APRC stands for Annual Percentage Rate of Charge. Much like with APR, APRC is another measure of the borrowing costs of a financial product over a year. This rate, however, differs from APR in that it’s intended to give an estimated annual rate but based on a longer period than just a single year. This alternative rate is designed for types of borrowing such as mortgages or long-term secured loans rather than credit cards or short-term loans.

What Are the Benefits of APR?

Since its introduction, APR has provided a number of benefits to those looking for a clearer picture as to the annual costs of their loan or credit card.

  • It provides consumers with a clearer picture of the overall costs of their loan.
  • As APR is a requirement for any financial product, comparing two similar options is now a much easier process. This helps to create a much clearer and transparent picture of what the borrower may end up paying over similar terms.
  • Having to display the APR as part of a loan or credit card agreement also ensures that lenders are unable to hit unsuspecting customers with hidden fees or upfront costs.

 What Are the Disadvantages of APR?

While the introduction of APR has brought with it a number of benefits, there are still certain issues that you should be aware of.

  • When a lender advertises their product, they often do so with a representative APR, though not everyone who applies will receive this advertised rate. This means that lenders reasonably expect, at the time the rate is advertised, that credit would be provided at this rate or below to at least 51% of customers. However, this means that possibly 49% of customers will receive a different rate than that advertised.
  • Another issue with APR is that the calculated rate offered doesn’t include voluntary fees, such as payment protection insurance. Though some lenders still add these fees on despite this.
  • If you were to take out a product for longer than a year, then the APR won’t take into consideration any changes that happen outside the initial first year period. This can be an issue if something were to change, such as the ending of a promotional interest rate, outside of the year the APR is calculated.
  • As penalties like late fees are excluded from the calculation of the APR, the APR in this instance does not accurately reflect the total cost of borrowing.

What Can Affect the APR I’m Offered?

When you apply for a financial product, the lender will look at your borrowing history to see how you have previously managed credit. Such things as missed or late payments can negatively affect the interest rate the lender will offer, which will have a knock-on effect on the product’s APR.

Uncle Buck and APR

Here at Uncle Buck, we always ensure that our APR is clear and upfront when you apply for one of our loans so you can understand the actual rate applicable to your agreement. The online calculator at the top of our homepage also provides a representative example, including the representative APR, which makes clear the typical costs associated with one of our products, such as monthly instalments and the total amount you will need to repay. When looking to apply for a short-term loan, it’s important to remember that APR is the cost calculated over a year, while our loans are only available over periods of 4 and 6 months.  This can make comparisons between longer products and our loans misleading. A more accurate way of comparing how much a short term loan will cost is to look at the daily rate interest. Uncle Buck charge a maximum daily interest of 0.8% per day on the amount outstanding, that’s no more than 80p per £100 initially borrowed, per day.

We pride ourselves on our excellent customer service and our straightforward application process. Our customer service team are available to help with any issues you may have, while our online applications ensure you can apply wherever you might be.

An Uncle Buck loan should only ever be used to help manage short-term expenses. If you require assistance with another form of credit, then there may be cheaper, better-suited options available for your needs.

Apply for a Loan with Uncle Buck

If you’re interested in applying for a short-term Uncle Buck loan today, then we can help. We offer straightforward and hassle-free loans for managing unexpected expenses.

Before applying for one of our loans, we ask that you fit the following criteria:

  • Are over the age of 18
  • A UK resident
  • In employment
  • Have your wage paid into a UK bank account
  • Own a working mobile phone and a valid email address
  • Not currently in or anticipating entering debt management, an individual voluntary arrangement or bankruptcy proceedings

If you fulfil our required criteria, then you could be approved a loan simply by answering our application questions covering your personal information, residency, income, expenditure and banking details.

If you require help managing an unexpected expense, then why not consider an Uncle Buck loan today. Simply click the Apply Now button to begin your application.

If you have any questions regarding our loans, you can contact us at

Prefer to speak with a member of our friendly UK-based customer service team? Then call us on 01959 543 400. We are open Monday to Friday, 08:00 to 20:00 and on Saturdays from 09:00 – 17:00.