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When in dire need for money and when your personal resources have failed you, the only choice for you is to apply for a loan. This is the only way you can meet the demand for money you may be facing for any reason. The loans market is flourishing with numerous lenders and banks providing numerous varieties of loans.

In the domain of personal loans, there are two types of loans available, secured and unsecured loans. Secured loans are those in which n asset of considerable financial value is mortgaged against the loan. Unsecured loans are given without any kind of security. Before applying for a loan, it is imperative you should check out the loan market and do a comparative survey of the various types of loans available.

When a UK loan product provider, quotes a loan rate, it is sometimes not immediately clear, how much you will be eventually be paying or how much loan amount you are going to get. For example, when you shop around for savings accounts, you will come to know that different providers quote different types of loans such as monthly or annual rates, making a comparison of accounts difficult.


In the case of loans, a bank may give a loan quote of a loan rate which is different from another. Some banks may quote a low loan rate, but charge heavy upfront fees. Others conversely may give a loan quote of a high loan rate coupled with low upfront fee. In such a scenario, when shopping around in the UK loan product market, it is important that you know about the different types of measures such as the Annual Percentage Rate (APR) and the Annual Equivalent rate (AER). They are useful as they are calculated similarly across different lenders and banks. When comparing loans, it is better to see and compare these measures than to look at the headline rate.

The annual percentage rate (APR) is a loan rate quoted, which is a measure of the cost of borrowing money from a lender. They are quoted by the UK loan product providers and banks. The APR includes within itself any upfront fees charged by the lender and is spread out evenly over the loan repayment period. The APR is a quoted as a percentage of the loan amount.

In loan advertisements, a loan quote will usually have a typical APR. The actual interest rate charged will depend upon to your credit rating as well as personal circumstances. The typical APR is the rate quoted to around 66% of potential loan seekers. The APR also includes all the administration charges on mortgages, therefore, is higher than the headline rate.


The Annual Equivalent rate is a loan rate which is quoted on your savings and current account if your balance is lying in credit. It is similar the Equivalent Annual Rate (EAR), but this involves the interest earned rather the interest paid. The AER reveals the frequency of the interest paid and the effect of its compounding.



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