Understanding APR

Our QuickQuid site displays Representative 1734% APR for our short-term loans, and many of our customers ask us what it means.

We know why you are asking, as APR may not make complete sense for our short-term payday loans. Below we’ll try to clarify APR for you by defining it, explaining why we provide it and showing an example of how APR would apply to other short-term services.

What is APR?

Annual percentage rate (APR) represents the interest and fees used to repay a loan, calculated on an annualised basis. Based on the UK Consumer Credit Act of 1974, APR must be disclosed for all regulated loans prior to the credit application being finalised. The APR calculation includes factors such as:

• Interest rate
• Length of the loan agreement
• Frequency of payments and amount of each payment
• Certain fees associated with the loan¹

But, the APR may not include all loan costs — for example, fees for late or missed payments or same-day funding fees.

Confused?

You are not alone! In June 2010, an OFT report stated:

• “Many consumers find APRs a confusing measure of cost and find the total repayment amount a simpler and more understandable measure.”³

And perhaps even more direct:

• “APR is not the most suitable method to use to control prices of credit.”³

Just imagine if annual rates were used in everyday life...

Total Cost of Credit — Less Confusing for Short-Term Loans

Since QuickQuid loans can be as short as eight days and paid back on your next or following pay date (if it’s a two-period loan), you will never be charged an annual amount. Your loan is for a set duration with fixed finance charges between £10 and £14.75 per £50 borrowed. There are no extra charges or hidden fees.

Depending on your rate tier, here is what you would pay for a 30-day QuickQuid loan:

We Hope This Has Helped

APR can be a confusing way to explain the cost of a 30-day loan, especially since APR is meant to describe the cost of a loan borrowed over an entire year. Remember, UK law requires us to list the APR simply for the fact that it’s a financial product. So when you see our APR and cringe at the number of digits, remember that though the APR listed is high, the actual cost of a cash advance isn’t so high, and probably cheaper than the alternatives, like overdrawing your current account.

1. “A Better Deal For Consumers”, Department for Business Innovation & Skills, December 2009, p. 31.
2. “Credit charges and APR”, Office of Fair Trading, May 2001, p. 9.
3. “Personal current accounts in the UK”, Office of Fair Trading, July 2008, Annexe C, p.21.