APR Calculator — True Interest Rate
Calculate the true Annual Percentage Rate of any loan from the amount borrowed and total repaid.
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Annual Percentage Rate (APR)
14.68%
Monthly Payment
£241.67
Total Interest
£800.00
Monthly Rate
1.22%
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
The Annual Percentage Rate (APR) represents the total annual cost of borrowing, including interest and any mandatory fees, expressed as a single percentage. It allows you to compare loan products on a like-for-like basis even when they have different fee structures or compounding frequencies.
In the UK, all consumer credit advertisements must show a representative APR under FCA rules. The representative APR is the rate that at least 51% of successful applicants will receive. Your personal APR may be higher depending on your creditworthiness.
This calculator converts between flat rates, monthly rates and APR. Enter the loan amount, total interest or fees, and term to see the true APR. It is especially useful for comparing hire purchase, credit card and personal loan offers where headline rates can be misleading.
APR vs APRC vs AER vs EAR. APR (Annual Percentage Rate): true cost of consumer credit — interest + mandatory fees. APRC (Annual Percentage Rate of Charge): mortgages — includes set-up fees, valuation over deal life. AER (Annual Equivalent Rate): savings — what you earn including compounding. EAR (Effective Annual Rate): credit cards — what you'd pay if balance held 1 year. UK law requires APR/APRC on consumer credit advertising.
Representative APR vs personal APR. FCA CONC 3.5 — lenders must offer 'representative APR' to at least 51% of accepted applicants. The other 49% can be offered higher 'personal APR' based on credit score, income, debt-to-income ratio. A '6.9% representative' loan might cost you 9-12% APR. Always do soft search (MSE, Experian, ClearScore) before applying — soft searches don't damage score and show your likely personal rate.
Why APR is higher than 'interest rate'. APR includes mandatory fees spread over loan term. £10,000 loan at 6% with £300 arrangement fee over 5 years = ~7.4% APR. Longer terms reduce fee impact on APR. Always compare loans by APR, not headline interest rate. Some 'no fee' loans advertise low headline rates but compensate with monthly admin or insurance charges — APR exposes these.
When low APR is misleading. 'Up to 24 months at 0%' headline may apply only to first month, then jump to 39% APR. Always check the FULL term and full APR. Balance transfer cards charge 3% fee upfront — 24-month 0% balance transfer with 3% fee = ~1.5% APR effective. Loan APR doesn't include optional add-ons like PPI (now banned for new sales 2021) or unnecessary insurance — always decline those.
Example: Comparing a flat rate to APR
- Loan: £5,000 over 3 years at 5% flat rate
- Total interest at flat rate: £5,000 × 5% × 3 = £750
- Monthly payment: £159.72
- True APR (calculated): approx. 9.4% — nearly double the flat rate
Frequently Asked Questions
- What does the APR Calculator — True Interest Rate do?
- Calculate the true Annual Percentage Rate of any loan from the amount borrowed and total repaid.
- APR vs APRC vs AER vs EAR — what's the difference?
- APR (Annual Percentage Rate): true cost of borrowing on most consumer credit — includes interest + mandatory fees. APRC (Annual Percentage Rate of Charge): mortgages — includes interest, set-up fees, valuation costs over the deal life. AER (Annual Equivalent Rate): savings — what you actually earn including compounding. EAR (Effective Annual Rate): credit cards — what you'd pay if you carried a balance for a year. UK law requires APR/APRC on all consumer credit advertising for honest comparison.
- Representative APR vs personal APR.
- FCA CONC 3.5 — lenders must offer the advertised 'representative APR' to at least 51% of accepted applicants. The other 49% can be offered a higher 'personal APR' based on credit score, income, debt-to-income, loan amount. A '6.9% representative APR' loan might cost you 9-12% APR. Always do a soft search via Experian Eligibility, ClearScore, MSE Loans Eligibility before applying — soft searches don't damage your credit score and show your likely personal rate.
- Why is the APR higher than the interest rate?
- APR includes the interest rate PLUS any mandatory fees (arrangement, broker, admin) spread over the loan term. A £10,000 loan at 6% interest with a £300 arrangement fee over 5 years = ~7.4% APR. The longer the loan term, the smaller the fee impact on APR (a £300 fee over 5 years = 60p/year vs £300 over 1 year = full £300). Always compare loans by APR, not headline interest rate, to see true cost.