What does APRC mean?
APRC stands for Annual Percentage Rate of Charge. It is a financial term commonly used in the United Kingdom and European Union to represent the overall cost of borrowing, including both interest and other associated fees and charges, expressed as an annualized percentage.
The APRC provides borrowers with a standardised measure that allows them to compare the total costs associated with different credit products, such as mortgages, loans, or credit cards. It takes into account not only the interest rate but also any upfront fees, arrangement fees, and other costs associated with the credit agreement.
The APRC includes the following components:
- Interest Rate: The interest rate charged by the lender for borrowing the funds.
- Fees and Charges: Any upfront fees, arrangement fees, or application fees that are associated with the credit product.
- Other Costs: Additional costs or charges, such as insurance premiums, valuation fees, or legal fees that may be required in the borrowing process.
By considering all these factors, the APRC provides borrowers with a clearer understanding of the true cost of borrowing over the entire loan term. It helps borrowers make more informed decisions by comparing different loan offers on a like-for-like basis.
Lenders are legally required to disclose the APRC when advertising or offering credit products to consumers. It allows borrowers to have a better understanding of the total costs involved, enabling them to compare options and choose the most suitable credit product for their needs.
When comparing credit products, it’s important to note that the APRC may not reflect the actual amount borrowers will pay due to individual circumstances, such as credit history, loan term, or specific terms and conditions of the loan. Therefore, borrowers should carefully review the specific details of the credit agreement, including any additional charges or conditions, before making a final decision.
HOW CAN WE HELP?
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