Representative Example: £150 loan for 87 days. Interest 292% p.a. fixed. Total to repay £225.00. Representative 448% APR
There’s no need to be confused. The simple answer is that a Smart-Pig loan costs 0.8% per day
Once the total interest reaches HALF of what you borrow, no further interest is charged – even if the loan lasts six months or you run into trouble repaying. Most other lenders have a maximum of 100%, meaning we’ve saved students thousands of pounds in late payment interest and fees.
For example, to borrow £100 costs a maximum of £5.60 per week, but the most you could owe in interest, even if you ran into trouble, would be capped at £50. A 25 week loan would also cap at £50, making the cost £2 per week.
There are no late payment fees or other charges.
How Does It Compare?
To compare, a standard Halifax unauthorised overdraft for this amount would cost £5 per day, with no cap, and does not have to display a representative APR.
Of course, if you are in serious financial trouble you probably don’t need an instant loan – you need money. There is a big difference. A loan doesn’t give you “extra cash” – it just moves what you already have around to make your finances convenient, in exchange for a fee. If you need more money, that problem can only be solved by readjusting your income, expenditure, and any existing debt. Your university is probably able to help with grants and advice, as well as the Money Advice Service.
If the most I can owe in interest is half what I borrow, even if I’m in trouble, why do you have 1084% on your adverts?
You can never owe 1000s of percent in interest. This is just how the APR calculation works, which is more sensitive to loan duration than cost.
So, how does it actually work? See the example in the table below.
All the fictional loans in the table have the same daily interest rate of 1%, so all would cost 365% a year. (Note: the examples below are NOT our loans. Our loans are cheaper and have an interest cap. The loan that costs £1 per £100 borrowed has an APR of 3678% and the loan that costs £365 per £100 borrowed has an APR of 365%.
But There Are Still Pitfalls!
Be careful – companies with lower representative APRs may have higher interest rates or higher interest caps, simply because they write longer loans on average, or structure their loans as “rolling account credit” that you can dip in and out of at high cost but with the APR legally calculated over 12 months. These companies are often exempt from rules regarding high-cost credit, simply because of the structure of their contracts.
Smart-Pig Representative APR
Rep Example APR 1159.69% based on £100 for 40 days. Interest: £32.00 at fixed rate: 292% pa. Total to repay: £132.00 (Rep APRs change, updated 14/02/2017)
We recalculate our representative APR each quarter, which will change if our average loan duration changes. This means the representative APR can change significantly without us changing our pricing.
The representative example APR is not the actual APR of your loan. The actual APR will vary depending on the duration of your loan.
What Is The APR Calculation?
For a single drawdown, single repayment loan:
x = APR in %
c = Amount borrowed
d = Total amount to be repaid (in one payment on the due date)
s = Duration of the loan in years (the number of days the loan is for divided by 365 days)