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Loan advice

What is APR?

When you borrow money you will pay interest on that amount. Interest is worked out as a percentage on the amount you borrow. The longer it takes for you to pay off the amount, the more interest you will end up paying.

But don't just look at the APR it doesn’t include all the costs connected with a credit agreement. There may be charges for late or missed payments, or balance transfer fees on a credit card.

Important questions to ask before borrowing:

If you find a deal with a low APR, make sure that you find out:

Does the interest included in the APR vary, or is the rate fixed? If the rate is variable your repayments could go up or go down. If the rate is fixed, your repayments will stay the same.

Are there any charges that are not included in the APR? This could cover optional payment protection insurance, charges for missing a payment or being late.

What are the conditions of the loan or credit and do they suit you? Can you choose how and when you make the repayments? How much will it cost you to pay the loan off early? Are there charges for early repayment?

Can you afford the monthly payments? A more expensive loan (with a higher APR) could have lower monthly payments if they are spread out over a longer period of time. That might suit you if your budget is tight, but you will pay more in the long run. Check you can afford the repayments and that you will be able to keep up payments over the term of the loan. What if interest rates rise or your circumstances change?

If you’re having difficulty keeping up with your payments, don’t ignore it. No matter how bad things may seem please call our Advice and Support service. They can help you with benefits and advice. Please call for an appointment on 01785 312000.

For a new way to get credit visit: www.myhomefinance.org.uk

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