Lender in Focus 11.4: WageDay Advance how repayments work & APR

WageDay Advance APR

WageDay Advance APR

WageDay Advance is a payday loan company that offers short term loans to those struggling with financial troubles or cash flow issues.  

At Cash Lady, we want to help you understand all aspects of financial lending, not just cash loans. So, we’re here to help you really understand everything you need to know about WageDay Advance. In this blog post, we’re looking at how APR works, and what sort of APR WageDay Advance can offer, as well as how WageDay Advance’s repayment terms work.

What is APR?

APR stands for annual percentage rate and is typically the amount of interest you will pay on a loan. APR is expressed as a percentage, so you know how much interest will accrue. Also, APR is an annual figure and is averaged over the entire year.

As it is expressed as an annual figure, APR on some short-term loan products can be in the hundreds or even thousands. However, this can be misleading, as you won’t accrue that much interest. FCA regulations introduced in 2013 mean that you cannot repay more than double what you have borrowed from a payday loan provider.

It is important to note that APR is not the interest rate. APR is a broader term that shows the total cost of borrowing the money, which includes any fees. Interest rate shows the rate at which interest will accrue on your loan, but nothing else. Any additional fees, such as yearly fees, admin fees etc. will not be incorporated in the total amount.

For this reason, APR is often higher than the interest rate, to reflect the additional fees that are added when you take out a loan.

What is representative APR?

The actual APR that you will pay on a loan differs from person to person. The actual APR that is offered by lenders is often based on the credit profile of the borrower. This means that the actual interest rate can vary wildly and give different total costs for different people.

For this reason, quite often in advertisements or promotional materials, lenders will show what is called a ‘representative APR’. This is to show what the loan would cost overall, including any fees that may be present, and give potential customers an idea of how much they could borrow.

To be called a representative APR, this must be the APR that at least 51 percent of successful applicants will receive.

This does not necessarily mean that all borrowers will get the representative APR, but it is a good estimation of how much your borrowing may cost you overall.

How does APR work for WageDay Advance loans?

WageDay Advance offer a representative APR of 1294.1% on their loans. This is comparatively lower than other payday loan providers, e.g. Wonga has a representative APR of 1509%.

Before you take out a loan of any kind, it is wise to compare the representative APR of your prospective lender with others on the market. We’ve picked some of the lenders on the market and compared their representative APRs in the below table.

LenderRepresentative APR
WageDay Advance1294.1%
Wonga1509%
Lending StreamR1325%
QuickQuid1299.1%

However, WageDay Advance offers an actual interest rate of 292% per annum, which works out at 0.8% interest per day.

What about repayments?

When you take out a WageDay Advance loan, the repayment terms may differ between their different loan products.

If you take out a standard WageDay Advance loan, the repayment periods are one per month between one and three months. If you go a step up and take out a WageDay Advance Plus loan, the repayment periods are slightly longer, at one per month between four to six months.

How are repayments taken?

Upon entering into a loan agreement with WageDay Advance, you will be required to set up a continuous payment authority (CPA). WageDay Advance will use this to collect the money required for repayments from your bank account on the dates that are agreed in their contract.

CPAs are very common amongst short-term loan providers, but if you are not comfortable with having a CPA authorised on your account, you can also set up a direct debit for your repayments.

When are my repayment dates?

Your repayment dates will be outlined in your agreement, but WageDay Advance will also send out repayment date reminders at least three days before you are due to repay your loan. This helps you know when your loan repayments are due so that you can be in control of your finances.

Are repayment dates able to be changed?

You can change your repayment date to a maximum of five days later than your current repayment date without being charged any additional interest by WageDay Advance. To do this, you will need to contact WageDay Advance and talk to an advisor.

What about repayment caps?

WageDay Advance is an FCA-authorised lender. They are regulated and therefore must adhere to FCA regulation around short-term loans.

  • Fees and interest per day must not exceed 0.8% of the amount borrowed
  • Default fees must not exceed £15, although interest can still be charged after default (but only at or below the initial rate)
  • Borrowers will never pay more in interest and fees than 100% of the total amount they borrowed.

As with all financial agreements, it is incredibly important to look at all the details before you enter into an agreement. Make sure that you are aware of how much APR you will have on your loan, as well as what the actual interest accrued will be. It is also wise to be aware of when your repayments are, and how much the amount is.

Still got a few questions? Leave a comment below, or drop us a line on Facebook or Twitter. Remember that if you’re stuck in a financial emergency, you can always apply for an online loan from Cash Lady – we’re here to help you.

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