Understanding Representative % APR

Before borrowing a short term loan, very careful consideration needs to be taken to ensure you are borrowing responsibly and in an affordable manner. The APR % is a number advertised by lenders enabling borrowers to easily compare similar financial products.

The APR alone can be somewhat confusing because it is does not directly reveal the actual interest that you will be charged on your loan. Its primary purpose is to give you a quick way to compare similar products. Equally, if not more, important though, is making sure that you are aware of and understand the actual interest and charges associated with a loan product and being sure that the repayments are affordable for you.

The APR is calculated using a number of factors, including, the amount you borrow, the length of time you borrow for, how frequently you make instalments and how much they are for, and any extra charges that may be added into the total loan repayment.

Instalment loan, charges and APR

In addition to publishing our APR, we endeavour to clearly communicate the exact amount that borrowing a loan from Money Boat will cost. We do this by providing a detailed break down of your repayment schedule. This includes the dates of repayment, principle and interest repayment amounts, the duration of time interest has occurred for each repayment and the totals. In addition to the APR, we display this breakdown of repayments on both the pre-contract information sheet that we provide as well as the loan agreement and our funding confirmation email.

The following equation is used to calculate the APR for each loan were the left hand side represents drawdowns and the right represents repayments.


The table below shows an example of what we’d charge you on a £400.00 loan to be repaid over 113 days or 4 months (4 instalments). The table below includes the following interest:

  • 0.7% – the daily rate of interest charged, which is LESS than the 0.8% CAP the Financial Conduct Authority has introduced
Amount borrowedLength of timeTotal to repay  Capital PaidInterest PaidCapital Balance Remaining
£400.0021 days£149.37£90.57£58.80£309.43
30 days£149.37£84.39£64.98£225.04
29 days£149.37£103.69£45.68£121.35
33 days£149.37£121.35£28.02£0.00
Total: £400.00113 days£597.48£400.00£197.48

Taking into account all the interest and the charges listed above the loan carries a Representative 939.5 % APR.

Use our sliders above to work out your repayment on your next instalment loan.

Remember, the above example is over 113 days; the interest charge for credit is 0.7% per day so will change depending on the number of days the loan is taken out for. Should you require more information or a further explanation please contact us via phone or email. Details at the foot of the page.