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What’s the difference between APR and APRC?

Andrew Goldman

Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.

As you might have heard, prior to the 2008 financial crisis, some mortgage providers were about as scrupulous as starved rats dropped off at a pizza festival. Because of this, in 2016, the EU instituted the Mortgage Credit Directive (MCD), which aims to provide transparency to all European consumers about the actual costs of mortgages. Frequently, when lenders used the term APR — or annual percentage rate — they would be advertising only an introductory interest rate that would disappear after a short period of time, commonly two years, after which the rate would swell to many times its size.

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The MCD came up with a new term, APRC, which stands for annual percentage rate of charge, and instead of providing you with a snapshot of those glorious dirt-cheap days at the beginning of the loan term, it instead shows you how much the average interest rate and associated fees would come out to on an annualized basis should you keep the loan for the entirety of the term. Though the APRC won’t be able to predict exactly how much you’d pay if you sign up for a variable rate mortgages, it does provide you a way to compare different banks’ mortgage offers on a level playing field. Many will certainly seek to remortgage at the end of a low-interest introductory term — but you have every right to know exactly what your financial picture would be in the event this magnificent plan goes awry.

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Last Updated March 6, 2018

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