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Understanding how APR Works

Your Annual Percentage Rate (APR) is the amount of interest that you pay on your loan amount. Typically, when you see banks, car dealerships or even payday lenders such as ourselves, publicly advertise an APR, it represents the average rate applicants receive. It doesn’t necessarily mean that it is the actual APR that you will get. You may get a higher or lower rate than the advertised APR.

Although our short term loans aren’t meant to last an entire year, our interest rates are expressed as an APR because it is the widely accepted “norm” for showing interest rates. In reality, the amount of interest you repay will be significantly less than the actual APR because you are paying the loan back within 30 days. For this reason, it is important that you realise that you should not compare the APR of a payday loan to a long term instalment loan.

Type of loan
Total repayment
Actual interest
  • Payday
  • Instalment
  • Instalment

While the APR rate may be higher for a payday loan than a traditional long term instalment loan, the actual interest that you are paying is usually less. For instance, a £500 payday loan with a 1 month term, at a rate of 2090% APR, will mean that you will repay a total of £649.75. However, if you borrow £500 with a traditional instalment loan with a 60 month term at a rate of 19.9% APR, you will actually end up paying back £766 in total, which is over £100 more than what you would pay back with the payday loan.

Remember, payday loans are meant to be short term loans, so if you borrow £200 and have to repay £250, it is much better to repay it within a month than spread the loan over the course of a few months or even years. The longer period of time that you have to repay the loan, the more interest you will end up paying. This is one of the chief advantages you get with payday loans.

One of the greatest benefits of using Swift Money is that there are absolutely no hidden fees or charges associated with the money you borrow. We offer completely transparent loans so that you know exactly how much you have to repay. Use our handy payday loan calculator to see exactly how much you have to pay back. This is yet another great advantage that you get with payday loans that you will not find with your traditional instalment loan. We don’t charge any setup fees or maintenance fees. Your loan with us is very simple and quick. Don’t be deterred by the fear of having to pay high interest rates. As you can see, the amount of interest that you pay is significantly less than what is first imagined.

Swift Money Payday Loans

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  • Swift Money Ltd
  • Digital World Centre,
    1 Lowry Plaza,
    The Quays, Salford,
    M50 3UB

    Tel: 0800 567 7444

SwiftMoney.com operate a credit brokerage service and is owned and operated by Swift Money Limited.
Swift Money are not a direct lender. If you complete an application through our website, it will be shown to our lending partners for their consideration.
We do not charge any fees for the use of our service, but we do receive a commission from our lending partners following successful introductions from our website.
Any information we provide is for the purposes of illustrating the lending process only and should not be read as financial advice.

Warning: Late repayment can cause you serious money problems. For help, go to: moneyadviceservice.org.uk.
Swift Money are an authorised credit broker.