Let’s Talk About APR

You will often see ‘APR’ mentioned on various financial products such as loans, and credit cards. But do you know the importance of knowing what an APR is and how it works?

BDCU is here to provide you with all the information you will need.

What is APR?

APR is the Annual Percentage Rate which is a term used and advertised by a lender. The APR is the rate you pay on an annual basis. It is made up of the interest rate and any costs and fees related to the loan. All providers must provide you with the APR rate when lending you money. It is also useful for you to compare APR rates provided with similar products.

What is Representative APR?

This is known as the advertised rate that you will pay for however long the term is for you to repay a product back. Representative APR refers to the rate that at least 51% of people who are accepted for that product will pay or lower. Meaning up to 49% of people who take out that product may pay a higher APR than that advertised. The higher APR given can be due to that person’s credit history and financial status.

What is a Personal APR?

This is the APR you are liable to pay with the loan. If you want the loan at this rate, you will need to agree to pay this APR as stated on your loan offer or you will be rejected. Therefore, you should double-check the actual annual percentage rate you are being charged for your loan.

Do Some Research

Before you apply for a loan or credit card make sure you understand the criteria requirements and can afford the charges. Do some research by:

• Comparing lender products and APRs so you can make the decision best suited for you
• Check you meet the criteria for getting the product as this will give you an indication as to whether your application will be accepted or not
• Click on any FAQ’s section or links presented on the website page of the product to get more information
• Beware of Loan Sharks! If your loan offer is not printed or available electronically with a quoted APR, its likely from an illegal lender. Visit the ‘Stop Loan Shark‘ Website for more information.

What is BDCU doing?

Our loan web pages have a ‘Loan Quote Slider’ to help you understand the cost of a loan with BDCU. It allows you to calculate the amount you want to borrow with the term of the loan and provides the estimated repayment, APR and the total amount you would repay so you can decide how much you can afford to borrow.

For example:

A loan of £6,000 over 60 months is estimated to cost £134 a month at 12.7% APR and the total you would repay is £8,011.00.

However, once you apply and your credit history and financial status is taken into consideration, you may be asked to pay a higher APR if you are accepted for one of our loans that will be stated in your offer letter if you are accepted.

Financial Education Workshops:

Our Financial Inclusion Officer Ian Brewer works with our payroll and community partners to educate community practitioners as a ‘Train the Trainer’ workshop called the ‘Money SOS’ Workshop. This is a free 1-hour workshop he has designed with the help of a mental health artist to highlight financial terms people understand the least.

The ‘Money SOS’ workshop includes topics such as:

1.     APR

2.    PayDay Lenders,

3.    Loan Sharks

4.    Contactless

5.    Overdrafts

6.    Credit Score

7.    Bradford District Credit Union

 

To find out more information on how you can get involved, contact ian.brewer@bdcu.co.uk