SafetyNet Credit APR and how repayments work
The next chapter on SafetyNet Credit and our Lender in Focus series concentrates on the SafetyNet Credit APR and how their repayments work for customers.
SafetyNet Credit offers its customers a revolving line of credit with no minimum or maximum repayment terms.
They take repayments in two different ways:
- Automatic payments from your bank account
- Manual payments from you when you choose to do so
In order to pay back any money you owe to SafetyNet Credit, they will take a repayment when they see money coming into your account. This will only happen when the balance of your bank account is above your SafetyNet level.
SafetyNet Credit will never take a repayment from your account if it would reduce your balance to your SafetyNet level. Because this would trigger another credit instalment from them. To ensure this does not happen, they will only take payments which would leave you £30 or more above your SafetyNet level.
Subject to this, the repayment amount will be everything you owe SafetyNet Credit in capital and interest. Or, a lesser amount which would leave you with a bank balance of £30 or more above your SafetyNet level.
The minimum amount of money which is paid into your bank account that will trigger a repayment is £50. If the balance you owe SafetyNet is less than £50, they may take the full amount owed on a lesser amount being paid into your bank account. This is subject to the application of the above rules.
What if they have not collected repayments?
If SafetyNet have not collected any repayments. And if you have not paid the minimum repayment for any month by its due date on your statement. Then, SafetyNet Credit will try to take the minimum repayment from your account to try to prevent you from going into arrears. This is subject to them leaving you £30 above your SafetyNet level.
If SafetyNet Credit does not have access to your real-time banking data, then no automatic payments will be taken. This could happen if, for example, there was an IT failure. SafetyNet Credit will let you know if they are not connected to your bank account for any reason.
Unless you have paid since your statement date, SafetyNet will use continuous payment authority (CPA) to take the money you owe them. (capital and interest.) They do this when they anticipate that your salary or other regular income will be paid into your bank account. This is when they believe that you should have sufficient funds to make the full repayment and is known as the Target Date.
SafetyNet Credit will notify you at least 48 hours before they attempt to take the repayment, via email, SMS or telephone call. What if they are not successful in taking the repayment of the full amount you owe them? They will then try to take out the minimum repayment from your account on the Target Date.
You can make repayments at any time from your dashboard on the SafetyNet Credit website or app.
Your statement will show your contractual minimum repayment for the month. This will be 5% of the outstanding balance of capital and interest. This is subject to a minimum repayment of £20. If you owe less than this, the minimum repayment will be, the outstanding balance.
Only meeting minimum repayments will mean that you will take longer to pay off your credit and this could cost you more in interest.
If SafetyNet Credit sees money coming into your account, they may take more than the minimum payment. They state that most of their customers fully repay what they borrow on a monthly basis.
What is the APR?
SafetyNet Credit has a representative APR of 68.7% (capped at 40 days).
They charge 0.8% interest per day on borrowed money for up to 40 days. This means you will be charged 80p per £100 deposited per day.
For example: If you borrowed £200 for 4 days, you would be charged £1.60 interest per day and the total interest would be £6.40.
Interest is charged on a daily basis and includes the day they lend to you and you receive the money in your account.
SafetyNet Credit’s Daily cap
Usualy, SafetyNet Credit charges 0.8% interest per day.
SafetyNet Credit’s total loan value repayment cap
The maximum total cost of credit is fixed to the interest on 40 days borrowing. Also, this means for each £100 credit instalment, the maximum amount of interest charged would be £32.
How does the APR compare to other lenders?
APR is an annual percentage rate and is the average interest you could expect to pay back if you took a loan out for a year. This is a measure that you can use to compare different lenders’ interest rates.
It can be quite confusing when it comes to short-term loans. Due to the short nature of short-term lending, the APR can be very large. Furthermore, it is worth calculating how much you would pay back over the term of your loan so you can see exactly how much you will be expected to pay.
It is worth noting that not everybody who applies for a loan will be offered the representative APR.
CashLady has selected some short term loan providers for comparison. This is to compare SafetyNet Credit’s APR with other lenders.
Wageday Advance has a representative APR of 1294.1%.
For example: If you took out a loan for £300 for a period of 1 month, you could expect to pay £67.20 in interest. In this example, you would pay back a total of £367.20.
Sunny has a representative APR of 1299%
For example: If you took out a loan for £300 for a period of 1 month, you could expect to pay £72 in interest. In this example, you would pay back a total of £372.
Finally, the Money Shop has a representative APR of 450%.
For example: If you borrow £350 for 6 months the totally amount repayable is £516.90 in 6 monthly instalments of £86.15.