How it is calculated
For each offer we compute the payment and the total you pay (payments + fees), then the effective APR: the reducing rate equivalent to what you actually receive (amount − fees) against the payments.
The lowest total cost is cheapest for the same amount and term; the lowest APR is cheapest when terms differ.
Worked example
Offer A: 5% flat over 5 years, no fees; offer B: 8.5% reducing with a 1% fee. Although 5% looks lower, its APR is about 9.15% while B’s is about 8.93% — B is cheaper.
Frequently asked questions
Why not compare monthly payments only?
A lower payment can mean a longer term and more interest. Compare total cost and APR.
Should I include insurance?
Yes — put mandatory insurance and admin fees in each offer’s fees.
What about early repayment fees?
They are not in the calculation but matter if you plan to repay early — ask each bank.