Why the APR is not the rate
A flexible loan's quoted rate and its APR are different numbers. The rate is what the lender charges on the balance each year. The APR is the effective annual rate that equates the cash you receive with everything you repay, so it includes the compounding of monthly interest and any fee. Under the FCA's rules it is worked out on the basis that a year is 365 days, 52 weeks or 12 equal months.
Worked example: £15,000 over 18 months at 34.9% with a 2% fee
With no fee, a nominal 34.9% charged monthly (2.9083% a month) is an effective annual rate of 41.06% on £15,000 over 18 months. A 2% fee deducted from the loan means you receive £14,700 but repay on £15,000, which lifts the APR to 45.05%: the fee adds 3.99 percentage points. The monthly repayment is £1,082.20 and the total cost of borrowing is £4,779.52, made up of £4,479.52 of interest and a £300.00 fee.
Without the fee the APR is 41.06%, the figure Fleximize rounds to 41.1% in its published example for this loan.
A short advance with one fee
For a single repayment the APR is (1 + fee ÷ advance)^(365 ÷ days) − 1. A £50 fee on a £1,000 advance outstanding for 30 days is 81.05%, though the fee is only 5.00% of the advance. The same fee for 365 days would be 5.00%: the shorter the time, the higher the APR from the same fee.
What this calculator leaves out
It leaves out the extra assumptions the FCA's rules add for open-ended credit, a variable rate, and charges that are not compulsory. A lender's representative APR is the rate at least 51% of customers receive, so your own APR may differ. The result is an estimate for comparing offers on the same footing.
To work out the repayment and the saving from settling early, use the flexi loan calculator.
To solve the APR from a lender's repayment offer, use the business loan APR calculator.
Use the right country page
This page uses pounds and shows the APR as an effective annual rate. The country choices above the inputs open separate local pages. Choosing United States opens the US flex loan APR calculator, which shows the APR as a nominal rate and adds a line of credit with a daily fee. Inputs reset and amounts are not converted.
Inputs for the flex loan APR calculation explanation calculator
Type of flexible credit
Choose a fixed-term flexible loan, or a single fee on a short advance.
Amount borrowed
The loan or advance, before any fee is taken from it.
Interest rate per year
The yearly rate before the fee, as a percentage.
Term
The months you take to repay the loan. A whole number up to 120.
Arrangement fee
A percentage of the loan, deducted from the cash you receive. Enter zero if none.
Fee per day
A percentage of the balance charged every day, on top of the interest.
Fee
The single fee charged for the advance.
Days
How many days the advance is outstanding. A whole number up to 365.
CALCULATOR QUESTIONS
UK flex loan APR calculation explanation questions
Why is the APR higher than the quoted rate?
Interest compounds monthly and a fee reduces the cash you receive. On £15,000 at 34.9% the rate alone is 41.06% effective, and with a 2% fee the APR is 45.05%.
How much does a fee add to the APR?
A 2% fee adds 3.99 percentage points here.
How is the APR of a short advance worked out?
(1 + fee ÷ advance)^(365 ÷ days) − 1. £50 on £1,000 for 30 days is 81.05%.
Is this the APR a lender must show?
No, it is an estimate on stated assumptions. A lender's APR follows the FCA's rules and its own repayment pattern.
Does the 51% rule apply?
A representative APR only has to be offered to at least 51% of customers, so you may be offered a higher rate.