If you are looking to obtain a loan, you should be aware that the APR is very important. This allows you to calculate the amount of money that you’ll end up spending to obtain and service the loan and not every customer receives the save APR. This means you have to be careful to determine what is available to you and how much it’ll cost you to pay back the loan.

When looking at APR, you’ll often see the terms representative APR and typical APR. These are two different things and it is vital that you are aware of the difference. The term representative APR refers to a rate that is offered to a minimum of 51% of applicants. This rate will include all of the interest charges, fees and any other compulsory extras associated with the loan.

Understand differences between representative APR and typical APR

The typical APR is a rate which is offered to at least two thirds of the applicants applying for a loan. Again, the typical APR will include all of the fees, interest and additional charges associated with the loan. It may not seem as though there is too much of a difference between these types of APR but it is important to be aware of the differences and not to base your application on the more attractive APR because it may not be available to you.

You should be aware that you are more likely to receive an APR that is closer to the typical APR than the representative APR. Of course, depending on your credit score and the nature of the loan you are applying for, you may find that you don’t qualify for either of these rates. Clearly there are applicants that don’t receive the representative APR or typical APR so no matter how much you review the representative APR and typical APR, they may not made available to you.

This is why it is vital that you understand your options when it comes to loans. If you are not in a position to receive an attractive rate of APR, it may be best for you to consider a guarantor loan. A guarantor loan sees the lending company look at the guarantor and then determine the APR as opposed to looking at the credit rating of the applicant.

This is likely to enhance your chances of receiving a positive APR, which will help you to save money when paying back your loan.