If you are applying for an Uncle Buck payday loan, you may find that you do not get the rate advertised, which is currently 1249.2% APR Representative.

When applying for a short term loan or insurance product, customers will always try their best to compare rates against other providers, use comparison websites and try to get the lowest fees possible. However, many get a surprise when the see that the rate displayed by their chosen provider is different to what they are offered in the loan agreement. We explain in more detail below.

Understanding Representative APR 

Loan products in the UK are advertised with an Annual Percentage Rate of charge (APR) which can be used to compare different credit and loan offers.  The  ‘representative APR‘ displayed in any financial promotion or advertisement must be the rate the credit provider expects to be offered to at least 51% or just over half of all successful applicants. The individual usually has to fulfil a certain criterion in order to get the exact rate offered. But, they could in fact pay higher than the rate advertised or even less.

Uncle Buck Representative Example: Borrow £300 over 4 months with three repayments of £118.20 and a final repayment of £113.67 totalling £468.27. The interest rate is 292% pa (fixed). Representative 1249.2% APR.

Our representative example gives our customers an idea of the costs of borrowing and how repayments work, explaining the amount of each repayment and the number of repayments. The interest rate we charge is fixed meaning that it does not change during your loan term, so you know upfront exactly how much you are paying from start to finish provided all repayments are made in accordance with the terms of the agreement. The opposite of this is ‘variable’ meaning that interest can change during the loan term due to market forces and economic changes.

However, to receive the rate advertised, you would need to borrow for the same loan amount and duration mentioned in our example.

Credit Checks 

Prior to funding a loan, each applicant will go through a series of credit checks which are conducted through credit reference agencies. This allows us to receive real-time information on your credit history and get an idea of how much debt you have open and how well you have repaid other forms of credit in the past – assisting us to determine your creditworthiness.

Across other financial products such as mortgages and credit cards, the best rates are typically reserved for those with the strong credit scores. This is because the lender is taking on less risk of the customer defaulting and statistically, they will have a high probability of repaying their loan and interest on time.

credit-score

By comparison, those with adverse credit will be accustomed to paying higher rates since they are at a greater risk of default and therefore the lender may have to charge more to mitigate the costs of default.

For credit cards, those with the best credit ratings can achieve zero percent interest for a period of time or be offered rates of 18.9% APR Representative. Those with bad credit may be charged up to 34.9% APR. 

Affordability Checks 

You may not get the rate advertised due to creditworthiness and affordability checks. This is where lenders look very carefully at your credit score and the ratio between your income and expenditure to see how much you can afford to repay without falling into financial difficulty. To calculate this, application forms usually ask you to include your monthly expenses and your income and some credit providers sometimes require proof of this with additional documentation.

expenses

Those who have been at the same residence for several years, have kept the same job, maintain a solid income stream and make credit repayments on time and when due, will be in a good position to achieve the rate advertised. (Source: MoneyAdviceService). However, those who have little disposable income due to high expenses and unstable income, may not be eligible for a loan or the best rates available.

Better Rates for Loyal Customers 

For some financial products, those repeat customers who have already demonstrated their ability to repay a loan on time are considered less risk and may be eligible for more favourable rates. At Uncle Buck, we operate a clear and transparent charging structure and are also willing to extend our borrowing facility to £1,000 for repeat customers.

However, the individual will still need to pass the relevant credit and affordability checks to access the maximum loan amount. In fact, there may be a point where we will no longer continue to offer more loans to the individual if we do not see their financial situation improving.  This is because our loans are an expensive form of borrowing, intended for occasional use and should not be used by our customers to manage existing debt.

For Insurance Products 

Motorists and business owners will typically compare insurance through popular comparison websites. Similar to loans, it is important to know that the rates advertised are only available based on certain conditions.

In the case of car insurance, many policies advertised require you to pay the maximum voluntary excess on your insurance policy which may be £500 or more. This will achieve to lower your overall premium because it assumes that you will pay more of the bill if you need to make a claim. Realistically, more motorists will not pay the maximum excess in case they need to claim and this can drastically change the premium offered.

In Conclusion 

The best rates for loans and insurance may only be available to those with the strongest criteria or those able to meet a certain eligibility. It is important to read any advertisements and terms very carefully when comparing the cost of financial products. For any questions about the rates that we charge, please email us at info@unclebuck.tv or visit https://www.unclebuck.co.uk/costs.