What is guaranteed APR rate?

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A young woman sat at a table budgeting with her laptop and calculator

If you’ve been looking to take out a personal loan or credit card, you’ve probably seen the term guaranteed APR. 

If you’re not sure what it is, don’t worry – below we explain what this term actually means.

What’s APR?

APR, or annual percentage rate, is a standardised way of expressing the cost of borrowing money. It includes the interest rate on a loan as well as any other fees or costs associated with borrowing. 

APR gives you a better understanding of the true cost of borrowing because it considers the interest rate and any additional charges that come with the loan.

There are several different types of APR, including guaranteed, representative, introductory, and penalty. Find out more in our guide to APR.    

What’s representative APR?

To understand guaranteed APR, you need to understand representative APR: the advertised rate at least 51% of customers will pay to borrow money.

Representative APR is a useful tool for you as a consumer because you can quickly compare lenders and products to see who offers the best rate. 

It’s also helpful for lenders to advertise their products with one illustrative rate.  

However representative APR is not guaranteed for everyone. If only 51% of customers are given the representative rate, nearly half of those applying for a credit card or personal loan could pay more than the advertised rate. 

Representative APR is usually the lowest APR a lender offers.

Ultimately, the lender will decide what rate to offer you based on how your credit and financial information match their criteria. 

What’s guaranteed APR?

Unlike representative APR, guaranteed APR means the rate you see is the rate you’ll get. It’s the ‘real’ APR you’ll be offered when you take out the loan. You may also see it referred to as ‘exact’ APR.

Guaranteed APR tends to be higher than representative APR, but having a guaranteed rate means you may be able to budget for your repayments more efficiently. 

If you apply for a loan with guaranteed rate, your success will depend on your financial circumstances and credit history.

How can I find out my guaranteed APR?

To find out your guaranteed APR, you’ll usually need to complete a loan application in full. Although some lenders may offer a guaranteed rate when you get your quote, like us.

The downside is that every time you make an unsuccessful loan application, it can impact your credit score. That can affect how likely you are to be accepted for future loans. 

To keep your credit score healthy, it’s a good idea to use an eligibility checker to find out whether your application would be successful before applying. 

If you get a quote for a loan with Admiral Money, your credit score won’t be affected. 

What’s a pre-approved loan?

You might come across the term ‘pre-approved’ when getting quotes when you’re shopping around for a loan. 

It means that the lender is likely to approve you to borrow the amount you want, as long as you pass the fraud and verification checks. 

But even if you’ve been pre-approved for a financial product, the lender isn’t committed to lend you the money. There’s still a chance you could be denied a loan even if you’re pre-approved for it. 

Check out our guide to taking out a loan for help with the loan application process.  

Guaranteed rate and currency exchange

You might see ‘guaranteed rate’ mentioned in the context of exchanging currency or making transfers to foreign accounts. 

In that instance a guaranteed rate means that the currency exchange provider will give you a fixed exchange rate for a specific transaction. This is true even if market rates change between the time you agree to the rate and the actual transaction.

Guaranteed exchange rates can be useful in situations where you want to protect yourself from potential currency fluctuations. 

For example, if you're planning to travel abroad and want to have a fixed idea of how much money you'll have in the foreign currency, you might choose a guaranteed exchange rate.

Remember guaranteed exchange rates might come with certain fees or requirements, and they might not always offer the best rate compared to real-time market rates.

To remember when applying for financial products 

Financial products and terms can vary between lenders, and it's always a good idea to compare offers from multiple sources before committing to a loan or credit product. 

Always read the terms and conditions of the loan to make sure you understand all aspects of the APR and any associated guarantees.

Whatever your plans, an Admiral loan could help