Understanding how much borrowing really costs
When you’re comparing loans, credit cards or finance deals, you’ll often see two different figures: Interest Rate and APR. They sound similar, but they don’t mean exactly the same thing.
At Northern Community Bank, we believe in keeping things clear and jargon-free. So here’s a simple breakdown to help you understand the difference.
What Is an Interest Rate?
This is the basic cost of borrowing the money. It’s shown as a percentage and tells you how much interest you’ll be charged on the amount you borrow.
For example, if you borrow £1,000 with an interest rate of 10%, you’d pay £100 in interest over a year (before fees or other charges are added).
What Is APR?
APR stands for Annual Percentage Rate. It gives you the full picture of what a loan or credit product really costs over a year, including interest and any extra fees or charges.
This makes it easier to compare different lenders and deals. If one loan has a lower interest rate but a high set-up fee, its APR could end up being higher than another loan with no fees.
APR is the number to look at when comparing borrowing options. It tells you the real cost, not just the headline rate.
Why It Matters
Some lenders promote low interest rates to catch your eye but don’t always mention extra fees, which push up the actual cost.
At Northern Community Bank, we keep things fair and transparent. What you see is what you get. No hidden charges. No nasty surprises.
A Quick Recap:
| Term | What It Means |
| Interest Rate | The basic cost of borrowing—just the interest charged on the loan amount. |
| APR | The full cost of borrowing over a year—includes interest plus any extra fees. |
Borrow with Confidence
Understanding your borrowing options puts you in control. Our team is always here to explain things clearly, so you can make decisions that work for you.
Looking for a loan that’s fair, affordable, and easy to understand? You’re in the right place.
You can always talk money with us.
