representative APR

What is representative APR, and what does it mean?

You might have been seeing letters APR from time to time in your papers or when applying for a loan. You might have questioned what it means for your benefit. APR stands for Annual Percentage Rate. Representative APR is a calculation of the full amount you will pay for a loan over one year. It also includes any fees you may need to pay, plus the interest rate a lender applies to your precise loan. 

Overall, APR is a percentage which tells consumers how much it will cost borrowing money (on top of the actual loaned amount itself). The higher the APR, the more you will pay for a loan overall. 

Why does APR matter?

It matters because the vast majority of lenders use APR as one of the most prominent figures within financial services. APR is a standard measurement in finances to sort through customers and their financial stability if they can repay. It can also help consumers to compare and contrast different financial products. 

All lenders must be open about APR with their clients before approval contract. 

What is the representative APR?

Each lender’s APR can look different on the paper, for each individual customer, even though they are using the same calculator.

Few variables for higher or lower APR:

  • Qualify for various rates
  • Your credit history
  • Your history with the lender
  • How much you want to borrow
  • How long you want to borrow for

For example, one customer can have a long, good history with the lender and will get a lower APR. But new customer with poor history will have a higher APR.

  • Representative APR

When lenders use the expression “representative APR”, they are referring to a rate which is 51% or more of applicants will be offered for their product. This rate includes all interest, fees and compulsory extras, including things like obligatory insurance policies.

Understanding the representative APR can give you a vision of the actual rate offer you can get from a lender. Most clients receive representative APR. The reason behind it is that representative APR collects all the fees together and a typical APR just part of them. 

However, in many cases applicants do not meet the criteria for their loan after they have been offered a product, fewer than two thirds or 51% respectively may ultimately qualify for the APR advertised.

Types of APR

Fixed APR:

With credit card use, expect to pay this interest rate, which will not change unless you fail to meet repayments.

Default APR and Penalty APR:

If you break a credit card agreement, you may be subject to default or penalty APR on any new transactions you make. This APR will typically be higher than your usual rate. Missed repayments and exceeding credit card limits are common causes of this.

Introductory APR:

In some instances, an introductory APR may be offered to attract new customers. This APR will be lower than the usual rate and must last for a minimum of six months by law. After this period, the APR will return to its usual, higher level.

Variable APR:

When national rates and economic factors change, APRs does too. These are known as variable APRs which are determined by what’s going on in the world.

Delayed APR:

This is an APR which will be incurred later. For example, a lender may advertise a product with “no interest until June”. The delayed APR is the APR you can expect to pay once the rate kicks in.

Tiered APR:

Different levels of borrowing may be subject to different APRs. This is known as tiered APR and is usually seen with credit cards where the first 50 -25000PHP has an APR of 16% while the next 25000 – 60000PHP has an APR of 17%. 


Overall, it is useful to know what APR is and stands for. It can help you in your financial journey in future, for smarter choice desitions. You can only benefit from this knowledge, – also you know that lenders should share information about your APR before the conclusion of a contract. Be smart and know what your offer should look like in your specific situation.  For more useful info, give a read to our blog to find out more!