Glossary · UK
What is Representative APR?
The APR that a lender must offer to at least 51% of customers who take out a credit product, shown in adverts as an example rate that better-qualified applicants may beat and others may not get.
Full Definition
Representative APR is the interest rate, expressed as an Annual Percentage Rate, that a lender advertising a loan, credit card or other consumer credit product must be able to offer to at least 51% of customers who are actually accepted for that product, under the Financial Conduct Authority's consumer credit advertising rules. It exists because many credit products are risk-based priced -- the rate a specific applicant is offered depends on their credit history, income and other factors -- so a single headline rate would otherwise be misleading. Seeing "representative APR 19.9%" on an advert tells a shopper that most successful applicants get that rate or better, but does not guarantee it: up to 49% of accepted applicants can legally be offered a worse rate, and the final rate is only confirmed once a full application and credit check has been carried out. Because the representative APR includes not just the interest rate but also any compulsory fees or charges built into the cost of borrowing, it is intended to give a more complete, comparable figure than a bare interest rate, and remains the standard way UK lenders are required to advertise loans, credit cards, hire purchase and other regulated credit agreements.