When applying for a car loan it is vital you understand what the lender is offering and how this affects you. Otherwise you could get a nasty shock after you have signed your agreement and it will be too late to do anything about it.

When applying for a car loan your chosen provider should always tell you what the Annual Percentage Rate (APR) will be.

APR is the interest rate which your car loan will cost you each year, most lender will have a typical APR.
 
Your car loan lender has to legally offer there typical APR to 66% of borrowers, the APR you are given depends on the criteria the lender wants you to fulfil. If you have a bad credit report or your earning can not be proved the rate you will be offered may be higher. Also your lender can reject your application if they consider you a risk.

The APR may help you work out the total cost of the loan you chose, most lenders average APR is anywhere up to 5% above the Bank of England Base Rate.