Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

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  • What is APR?


    Put simplyAPR is the annual percentage rate of interest associated with a loan. It can be a confusing thing to get your head around, but it’s an essential part of the loan process.  

    We want to help our customers understand every facet of their loan, and this includes APR, so we’re breaking down the subject here, to bring some clarity to the conversation.   

    APR in summary 

    APR is calculated by taking into account a loan’s total value, its interest rate and any other associated fees that come with it.  Because APR is representative of the amount you’ll pay on top of your original loan amount over the course of a year, it may not always be the best metric to use when judging short-term loans 

    For example, it may be difficult to use APR values to compare a £500 loan spread across twelve months, with a £500 loan spread across six months. The six-month loan may have a higher APR due to the shorter repayment period, but it may result in a lower total cost of credit (assuming that all contractual payments are met).   

    Representative vs personal APR 

    There are two types of APR, representative and personal. Representative APR is an advertised rate that at least 51% of loan applicants will get for that particular loan product. The other 49% will be offered a rate that is either lower or higher than the representative value. Personal APR is the rate that is applied to your personal loan. It may be the same as, less than, or more than the representative rate. 

    All loan companies must display their representative APR on their website and other marketing material. This allows customers to easily compare the differences between lenders.    

    The APR cap 

    The Financial Conduct Authority (FCA) has put a cap on high-cost short-term loans, which means that the cost of these loans, including the interest rate and any associated fees, must not exceed 0.8% of the loan value, per day.  

    This limit was brought in to ensure that no one will ever have to repay more than double the amount that they originally borrowed, providing protection for borrowers from lenders who place their profits above customer wellbeing.  

    At Oakam, we never charge the full 0.8% per day and many of our loans are well below the FCA’s maximum total charge for credit.    

    APR and Oakam loans 

    As Oakam provides short-term loans, the FCA’s cap does apply to some of our loans, but instead of sticking to the cap value and calling it a day, we set our rates below the maximum 0.8% from the start.  

    Interest rates for our Oakam loan product go all the way down to 0.27% per day. And if you graduate to a Big Plus loan with us, you could be offered rates as low as 0.11% per day – that works out as an APR of just under 49%.  

    We believe that by offering affordable loans, and keeping our interest rates as low as possible, we’re helping more people access the credit they need to improve their financial wellbeing. Another thing that sets us apart from other lenders is that the cost of credit can decrease as we get to know our customers better, and as they demonstrate to us that they’re reliable borrowers. If you maintain a positive repayment history with us, you’ll unlock access to even better interest rates, longer terms and bigger loan amounts, which can reduce the overall cost of your credit.  

    Understanding the basics of APR is a necessary step in the loan application process. Without this knowledge you could end up stabbing in the dark and hoping you’ve found a good deal. Although the nitty gritty mathematics can feel like a drag, it pays (literally!) to do some research on what the APR means for any particular loan.  

    It’s always better to be safe than sorry, and understanding these details is vital in ensuring you don’t take on a loan that you can’t afford. 


    Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk. To get debt advice information, we advise seeking independent advice from an impartial service like Citizens Advice or a qualified Financial Advisor. 


    Representative example: If you borrow £300 over 6 months at 279% per annum (fixed) you would make one repayment of £17.06 and 25 weekly repayments of £21.66. You would repay £558.56 in total. The total cost of credit would be £258.56. 

    Loan term lengths between 3 and 36 months. Minimum APR 67.97%. Maximum APR 1431.41%. New customers can borrow up to £800 for a term of 6 months. Existing customers can borrow up to £5,000 for a term of up to 36 months. Early repayment options are available and are not associated with any fees or cost. There are no additional fees associated with any of our loans. All loans are subject to status.