APR Explained

Our rate are higher higher than your typical high street bank rate or financial institution, but there are many reasons for this, and we would be delighted to explain why:

1. Much like traditional lenders, we could use fixed fees, long term products and small print to dramatically shrink our annual percentage rate (APR). However, the benefits of our short term service is its flexibility and complete transparency – and that’s something we won’t compromise or appear more conventional.

If a customer borrows £1,500 and pays it back over the full term of 78 weeks, their total repayable would be £4,388.28 (£2,888.28 in interest and fees), however, that same customer could choose to settle their loan (and the vast majority of our customers do) at any point during the term of the loan, and receive an interest rebate relevant to how soon they settle. Therefore the sooner they settle, the less expensive the product becomes. For example, by settling the loan after 4 weeks, the total repayable is just £1,861.40 (£361.40 in interest and fees).

1. We provide a personal service which is fast, professional and discreet, which is what our customers require. It is because of our care and unique service that 25% of our customers use over and over again. To provide this personalised service, V5 Loans Loans needs to employ an Underwriting team which covers the majority of the UK. All of these Underwriters respond to customer enquiries, to help provide the urgent service that our customers require.
2. Taking the above two points into account, it unfair to compare V5 Loans to a mainstream lender, because V5 Loans doesn’t conduct credit checks on customers. We provide a genuine ‘regulated and licensed lender’ service which is available to the people in the UK who are unable to obtain mainstream finance from the usual high street institutions. We are a licensed and regulated lender, and but for the lawful and decent service we provide, customers would be made to deal with unregulated and unlawful money lenders, with serious and dangerous ramifications.
3. Because of this the risk posed to V5 Loans is far higher and therefore the cost of maintaining our customer’s accounts is naturally higher and also because of the risk involved. This needs to be reflected in our rates, as with the first two points.
4. To illustrate the point that our APR is relevant to the market and the fact that we are a ‘regulated and licensed lender (usually as a last resort), we can compare the cost of our Representative APR of 498% with comparable products, which are far more relevant than a high street bank loan:

• Payday loans: Representative APR 4,214%
• Provident: Representative APR 272.2%
• Shopacheck: Representative APR 399.7%
• Pawn broking: Representative APR 119%
  Remember that a Pawnbroker will retain your asset, whereas we at V5 Loans allow our customers to get on with their life and continue to use their vehicle (also an asset which depreciates in value, unlike gold and jewellery etc).

Another APR myth busted:

The larger the APR the more expensive a loan, right? Incorrect. It’s a common perception, but with V5 Loan’s super-flexible approach to short term credit the opposite definitely applies. This is a good indication of the potential for APR to mislead when trying to judge the cost of a short term loan.

The cost of a V5 Loan is determined by the amount of money borrowed and the number of days you need it for – the shorter the term, the less you’ll pay in interest and fees. Yet APR actually increases as the term and cost of a V5 Loan decreases over time. Confusing? Well, as the loan period gets shorter, the more times you have to multiply and compound interest to make it into a theoretical annual figure!