TABLE OF CONTENTS
When you borrow money, interest is the cost of borrowing that money. It is added to your loan and repaid as part of your regular repayments.
Before you accept your loan, we'll always show you exactly how much you'll borrow, how much interest you'll pay (if applicable), and the total amount you'll repay.
Understanding the Basics
Principal
The principal is the amount you borrow before any interest is added.
For example: If you borrow £300, your principal is £300.
Interest
Interest is the amount charged for borrowing money.
For loans that charge interest, it is calculated based on your outstanding balance and forms part of your regular repayments.
Some Fair for You products, such as the Food Club Card, are interest-free, which means you'll only repay the amount you borrow.
Interest Rate
The interest rate is the percentage used to work out how much interest is charged on your loan.
The interest rate is set out in your loan agreement, along with the total amount you'll repay.
What Is APR?
APR stands for Annual Percentage Rate.
APR is a standard way of showing the overall yearly cost of borrowing. It's designed to help you compare loans from different lenders more easily.
APR may include:
The interest charged on the loan
Certain fees and charges (where applicable)
Because APR looks at the overall cost of borrowing, it can give you a clearer picture than the interest rate alone.
Why Is APR Important?
APR helps you compare different borrowing options on a like-for-like basis.
For example, one loan may have a lower interest rate but include additional fees, making it more expensive overall than another loan with a higher interest rate.
Looking at the APR can help you understand the total cost of borrowing before you decide which loan is right for you.
Will I Know How Much I'll Repay?
Yes.
Before you accept your loan agreement, we'll clearly show you:
The amount you're borrowing
Any interest that will be charged
Your repayment amounts
The total amount you'll repay over the life of the loan
This means you'll know exactly what your loan will cost before you decide to go ahead.
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