Why is my APR so high?

Ever found a credit card or loan with an APR that seems perfect, only to find that the rate is higher when you apply? Frustrating, right?

In this blog, we explain why lenders can offer different rates to different customers, and how they can advertise one APR but give another.

What is APR?

APR stands for Annual Percentage Rate. It's the yearly cost of borrowing money, including interest and any extra fees. Think of it as the "all-in" price for borrowing money.

The lower the APR is, the lower the cost. The fact that it’s shown as a percentage makes it handy to compare different offers and see which one might be cheaper overall.

Why didn’t I get the advertised APR?

When lenders advertise an attractive representative APR, it's only natural to want to grab it. But sometimes when you apply, the rate you get isn't the same. How do lenders pull this off? Isn't it false advertising?

Actually, it's not. A representative APR is a real rate that lenders offer to most customers. By law, they must provide this advertised rate to at least 51% of applicants. The other 49% can be offered different APRs.

Then why is my APR so high?

So, it’s not that the lender is lying - they do offer that rate – it’s just that they are selective in who they offer it to.

It might seem unfair that those with the best credit scores get the lowest rates, but lenders see it as a reward for responsible borrowing.

If you have a patchy credit history, it doesn’t necessarily mean that the lender won’t lend to you. But if you do get accepted, you might be charged a higher interest rate.

This can feel upsetting and like you’re being denied a good deal, particularly if you’ve spent time researching lenders and products, and found a deal that you’re happy with.

At this point, you’ll need to decide whether to accept the offer or keep looking for something better.

If you've been offered a high APR, but have good credit

Even with solid credit, you might receive a higher APR if you don't fall into the "excellent" category.

Lenders may reserve their best rates for top-tier scores and consider factors like income, existing debt, and your affordability (if you can afford your repayments if you are accepted).

Sometimes, a mistake on your credit report or being financially connected to someone with bad credit can also affect your rate. Check your credit score to make sure all the information on it is accurate.

If you're unsure why your rate is high, ask your lender for details. This clarity can help you decide whether to accept the offer or seek a better one.

The search continues

Although there’s no quick fix that will guarantee you’ll get the best APR advertised by the lender, there are things you can do to improve your chances. For example, you could work on boosting your credit score to show lenders that you’re a responsible borrower.

Find out how to improve your credit score in our helpful guide.