Shopping for a car can kick up a whole new world of car finance lingo, which can become overwhelming! Terms such as interest rates, APR, Representative APR, real rates, exact APRs can leave your head in a jumble as to what it all means. We’ve summarized below what you need to know in a quick and simple guide which should leave you seeing the wood for the trees when it comes to car finance jargon.

What is an interest rate?

An interest rate is the cost each year of borrowing an amount of money. It is expressed as a percentage of the total amount borrowed.

For example, if you borrow £1000 and you are charged a 10% interest rate, you’ll pay an additional £100 on top of the original £1000, so £1100 in total.

What is an APR?

‘APR’ stands for Annual Percentage Rate. This starts with the annual interest rate and also takes into account any additional fees, charges and final payments. The APR shows you the total cost of a finance deal – the higher the APR, the more you pay back over the life of the loan.

APRs help you compare finance products accurately on a like-for-like basis. The FCA (Financial Conduct Authority) requires all lenders and brokers (including car dealers) to state the APR of any financial deal on offer.

When shopping around, always compare one APR with another, along with the total amount you’ll pay back.

What is a representative APR?

The representative APR is often used to promote a financial offer, and is used to show the cost of credit for the majority of borrowers. It is calculated as the rate that is offered to at least 51% of customers.

The representative APR is important because it means that nearly half of customers will be given a rate more than the representative APR. This is especially true where you have poor or bad credit. However, those with an excellent or good credit rating will usually be given a better rate than the representative APR.

The important thing to remember is that not all customers are eligible for a lender’s best rate of interest, and so the representative APR is a better indication of what you could be offered if you don’t have a perfect credit file.

What is an exact APR?

An exact APR takes into consideration your personal circumstances, your credit profile and financial history, and your current financial situation. It is therefore an accurate calculation of the total amount you will pay back.

The exact APR is sometimes called a ‘personal APR’ or ‘real rate’ since it is tailored to you and your circumstances.

The lender will perform a credit check (or credit search) to calculate an exact APR. The healthier your credit score and credit history, the less risk for the lender, and the lower your exact APR.

With My Car Credit, we start every car finance application process off with a soft search, which means that no mark is left on your credit file. Wherever possible, we give you an exact APR using soft search. This means you can obtain a ‘real rate’ quote on car finance from My Car Credit without worrying about it showing up on your credit history.

How can I calculate car finance?

Even knowing what all of this car finance jargon means, it can still be very complex to calculate car finance. This is why we have a free Car Finance Calculator, which you can use to work out your typical APR (dependent on whether your credit score is excellent, good, fair, poor, or bad), your monthly repayments, your total cost of credit, and the total amount payable over the term.

Try using our Car Finance Calculator. Alternatively, you can search for a quality used car from our approved dealers, and calculate finance on a specific vehicle. It’s as easy as that!

We hope this has helped you understand the world of car finance a little bit better, and if you need any help or advice, our Car Credit Specialists are here to help!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!