APR (Annual Percentage Rate)

APR stands for Annual Percentage Rate. It represents the true annual cost of a loan or credit facility, including not just the interest rate but also mandatory fees such as arrangement fees and broker fees that are incorporated into the cost. APR is required by UK law for consumer credit products and most regulated business loans, enabling borrowers to compare like for like across different lenders.

For business loans, the APR is the most reliable way to compare total borrowing costs. A loan with a lower headline interest rate but a high arrangement fee may have a higher APR than a loan with a higher headline rate and no fees. Always ask for the APR and the total amount repayable, not just the monthly payment.

Note that merchant cash advances and some other business finance products quote a factor rate rather than an APR, making direct comparison difficult. Spark Finance always presents finance options with transparent cost disclosure.

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