If you are thinking about taking out a loan, then it is very important that you become familiar with what APR means.

The APR is something that you will want to compare when you look at different loan options. But even among the people who know the importance of APR, many still do not fully understand what it means.

What Does APR Mean [What’s My Interest Rate]

Once you know what APR is, it is actually pretty easy to understand. APR stands for annual percentage rate, and it basically corresponds with the amount of interest that you will pay on top of your loan.

So, before you take out a loan, it is very important to pay attention to the APR that comes with that loan.

With all this in mind, in this guide, we’ll be telling you all about what APR means, and how to find out the interest rate of your loan.

So if you want to find out more, keep on reading!

What Does APR Mean?

So, first things first, what does APR mean? Well, as we have just established APR stands for Annual Percentage Rate. Essentially, this represents the interest rate that you are expected to pay on top of the money that you have borrowed when you make repayments.

It is a very important number to bear in mind when it comes to applying for loans as it will impact how much money you will need to repay for the money you actually borrowed.

You can apply for loans for lots of different things, and they will all come with an APR or interest rate. The APR will differ from lender to lender, and from loan to loan, which is why it is very important to research different loans before applying for any.

No matter whether you are applying for a loan to cover a delay in your work pay, or a loan to purchase a vehicle, there will be an APR attached to that loan.

Typically, the APR for long-term loans tends to be considerably lower than short-term loans. Likewise, if you borrow a larger amount of money, you may expect to have a lower APR than if you were to borrow a small amount of money.

That is why the APR for short-term, payday loans tends to be higher than that of a loan for a new car.

APR is standard on all loans, and so you shouldn’t be surprised to find yourself paying interest on the loan.

After all, it is the interest that actually makes it worthwhile for the lenders to loan you the money in the first place.

As you start to repay the money that you have borrowed, you will begin by paying more interest than the loan. So, the bulk of your early repayments will be interest paid to the lender, rather than money repaid from your loan.

However, as time goes on, you will find yourself paying less interest and more loan. That is simply the way that APR is designed to work.

How Does APR Work?

Well, as we have just established, APR is the annual percentage rate that you are required to pay on the money that you borrow. When you apply for a loan, the APR will be calculated and spread across the entire term of the loan.

At the start of the repayment period, you will contribute a large amount of each loan repayment to the interest.

But as time goes by, the money that you pay in interest will reduce, and the money that you repay towards your loan will increase.

The APR will be calculated to suit your loan. In order to calculate the APR, the periodic interest rate is multiplied by the number of periods in the year when it was applied.

So the interest rate and the fees associated with the loan will be added together.

This will then be divided by the number of days in the loan term and then multiplied by 365 (for 365 days in a year). This number will then be multiplied by 100 to calculate the APR.

The APR will then be added across the loan, and you will be required to repay the money that you borrowed, plus this, back to the lender.

There are a couple of different types of APR, so let’s take a look at what they are.

Different Types Of APR

There are a couple of different types of APR that you need to consider when it comes to applying for a loan. Generally, most APRs will differ and that is because different lenders will use different APRs from one another.

Likewise, some lenders will charge a different APR from one service to the next, and this can make it all a little confusing.

So, let’s take a brief look at some of the different types of APR that you should make yourself familiar with.


As the name suggests, fixed APRs are fixed and set in stone. If there is a fixed APR on your loan, then the amount of interest that you are paying on top of your monthly repayments will never vary.

The APR will instead remain the same throughout the whole of your repayment schedule.

Sometimes, loans will come with fixed APRs for a set amount of time, but this will then change to a flexible APR. A great example of this is with mortgages.

Often, mortgages will come with a 2-year fixed interest rate, but after this, you will be charged a flexible interest rate. So, be sure to check how long the APR is fixed for if you are applying for a fixed APR loan.


In contrast, variable APR loans will have an APR that is constantly fluctuating.

With a variable APR, the interest rate may remain at the same rate for a few months, but at any point in time it could fluctuate and increase dramatically.

For this very reason, variable APRs can be rather risky because you will never know for certain how much money you will be spending in APR.

So, it is very important to check if the APR is fixed or variable before you take out a loan.

How Do I Find Out What My Interest Rate Is?

If you already have a loan, then you may want to find out what the interest rate is on that loan.

Thankfully, this is very easy to do. Especially in the modern age with online banking so accessible.

If you already have a loan, then you should speak to your lender to find out what the APR is. This will probably already be outlined on the official documents for your loan.

But if you cannot find these documents, simply give your lender a ring and they will be able to supply you with all the information that you need.

Alternatively, if you have online banking, simply log in and you’ll be able to find the information in your portal.


If you have taken out a loan, then you will be familiar with APR. APR stands for annual percentage rate, and it is the amount of interest that you will pay across your loan repayments.

In this guide, we have covered all the information you need to know about APR.

Thank you for reading!