The following information is for guidance only, it’s not legal advice. We strongly recommend that you read the Consumer Credit Advertising Regulations and speak to your local Trading Standards Office or consult with a qualified legal adviser before publishing a promotion.
Consumer Credit Promotions
Promoting credit is guaranteed to bring people into showrooms or generate enquiries. So whenever you’re investing in an advertising campaign or updating your website it can be well worth mentioning the credit products you offer – interest free, buy now-pay later or low rate finance.
However, you need to remember that if your promotion mentions finance then it’s almost always going to need to include either a representative APR or a representative example (there are exceptions for interest free). But which one should you use and how do you display it within the promotion?
Should I include a representative APR or a representative example?
If your credit promotion mentions the cost of credit (i.e. buy this conservatory from £199 per month) or an interest rate (i.e. low rate finance available at 4.9% APR) then you need to include a full representative example.
However, if the promotion simply includes a sales message for finance, without any reference to the cost of credit or an interest rate, then you can just include a representative APR.
What is a representative APR?
The representative APR is the rate that you expect at least 51% of loan agreements, which are entered into as a result of the promotion, will have.
When should I include a representative APR?
You should include a representative APR if the promotion includes an “incentive” to apply for credit or a triggering statement.
EXAMPLES OF INCENTIVES/TRIGGERING STATEMENTS:
- Buy now-pay later
- Spread the cost
- Easy finance
- Nothing to pay for a year
- Low-cost loans
- Easy monthly payments
How do I display a representative APR within a promotion?
The representative APR must be more prominent than the incentive statement. For example, you can do this by increasing the font size, using a brighter colour, placing the text in a more prominent position or putting it on a different background.
The representative APR should be written as a number followed by % APR and include the word “representative”, e.g. 9.9% APR Representative.
The representative APR should be quoted to one decimal place only.
What is a representative example?
A representative example contains the details about the credit offered, and is designed to help a customer work out the suitability and affordability of the loan.
When should I include a representative example?
A representative example must be included whenever a promotion mentions the cost of the credit or loan or an actual interest rate – this includes any mention of fees relating to the credit (except settlement fees).
EXAMPLES OF TRIGGERS:
- Buy this kitchen from £126 per month!
- Low monthly loans just 5.9%
- Repay the agreement with the deferral period and there’s no interest to pay
How do I display a representative APR within a promotion?
The representative APR must be prominent in relation to the trigger. For example, you can do this by increasing the font size, using a brighter colour, placing in a more prominent position or putting the text on a different background. On websites, your customers must not have to scroll to view the representative example.
What must I include in the representative example?
Regulations define what a representative example has to include and how it should be placed within an advert. The information can be displayed in a table or as a list, but you must give each piece of information equal prominence.
- Cash price £x
- Deposit (if applicable) £x
- Total amount of credit £x
- Annual rate of interest x% (fixed or variable)
- Duration of the agreement x months
- Monthly repayments £x per month
- Representative APR x %
- Total amount repayable £x
- Other charges (if applicable) £x
To find out more about how consumer credit could help your Home Improvement business grow, please contact us today.