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When it comes to car finance APR, there are two types you need to be aware of in order to understand exactly what costs you’ll be paying. Car finance APR: representative APR vs exact APR When you’re deciding what car to purchase or car finance option to choose, the APR will allow you to look at all the costs totalled together for an accurate overview of what you’ll pay - and what this would potentially look like on a month-by-month basis.Įssentially, having knowledge of your APR makes it much easier to budget your finances and enables you to more accurately research and compare various finance deals to find the right one. Legally, all credit agreements must have a clear APR associated with them, displayed in an obvious manner on any associated documents. While APR does include interest, the calculation also includes all loan fees, giving you a clear idea of how much you’ll pay in total for car finance, rather than simply the cost of interest. This includes the annual interest on a loan, as well as the money you borrowed and additional fees charged that might not be immediately obvious. What is APR for cars?ĪPR stands for Annual Percentage Rate and directly relates to the costs involved in financing and buying a car.Īt its simplest level, car finance APR is the annual rate of pay of your agreement, including all costs associated with the purchase. To help you understand what APR is we’ve broken down everything you need to know about car finance APR. While you might be tempted to brush this off as another term for interest, there’s a little more to it than that. One term you’ve likely come across in your search is APR. If you’re new to the car buying process, you might have experienced a little confusion around some of the finance terminology.