APR calculations
Last updated 19/11/2008: any recent updates in this colour.
The Annual Percentage Rate of Charge (APR) is designed to help consumers compare the cost of similar products. The rate is calculated according to a formula which is set down in the Consumer Credit (Total Charge for Credit, Agreements and Advertisements) (Amendment) Regulations 1999 (SI 1999 No 3177). These Regulations, which came into force on 14 April 2000, bring the calculation of the APR into line with provisions set out in a European Directive (No 98/7/EC).
Further information on what elements must be included in the APR calculation appear in chapter 10 of the Financial Services Authority's Mortgage Conduct of Business Rules (MCOB 10), which came into force on 31 October 2004.
The Office of Fair Trading (OFT) has issued detailed guidance, entitled Credit Charges and APR.
