A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.

The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.

Introduced under the Consumer Credit Act 1974 as a means of comparing like with like ie. One loan with another or one credit card to another. It should be quoted whenever money is borrowed. The APR calculates the total interest to be paid over the whole term and includes any charges to be paid as well as the headline interest rate.

Annual actual cost of credit, expressed as an equivalent yearly rate. The APR is intended to provide a common means of comparing the cost of credit available under different types of agreements.

This is the full average cost of the mortgage per year including all additional expenses and taking into account discounts and the remaining length of the mortgage term. The APR takes into account the time left on the loan and so reflects more accurately the 'real' cost.

APR is the cost of credit in relation to the amount financed at the onset of a loan and during the term of the loan. Lenders are required by law to state the APR on loan documents.

The actual interest rate taking into account the points and other prepaid fees expressed in annual percentage terms. Not to be confused with initial interest rate, a teaser rate lenders use to get you into a loan.

The full cost of credit including interest and loan fees expressed as a yearly rate. The APR provides consumers with a standard to compare the cost of different loans.

This is the rate of charge on a loan calculated to a set formula. It includes all the costs of the transaction including the rate of interest and other associated costs. It was introduced to provide a tool for comparing rates charged by different lenders.